Two-pot retirement a year on: Has it been successful? 'Yes, and no' - John Manyike, Old Mutual

The Money Show's Stephen Grootes speaks to John Manyike, Head of Financial Education at Old Mutual, about emerging risks and behavioural trends linked to South Africa’s Two-Pot Retirement System.

Listen below:

It's been almost a year since the two-pot retirement system was introduced.

The new system allows people to withdraw a portion of their retirement savings before they retire.

The withdrawals come from the ‘savings pot’.

On the first day the two-pot system came into being back in September, going against advice of experts, people withdrew R103 million from their savings pots, highlighting the financial struggles of South Africans.

So, has the two-pot system been a success?

Manyike says 'yes'... and 'no'.

ALSO READ: Two-pot retirement: Here's the RIGHT way to use money you withdraw

"On the one hand... in the long run, it will improve preservation levels..."

- John Manyike, Head of Financial Education - Old Mutual

On the other hand, he says, there is an issue with South Africans accessing their retirement savings early.

"To the extent that, even if there is some level of preservation, that level of preservation is not adequate to sustain people in their retirement..."

- John Manyike, Head of Financial Education - Old Mutual

Manyike says the result is that, while there will be more people preserving their savings than previously, there will also be more people retiring into poverty.

"That is the sad reality of the case." 

- John Manyike, Head of Financial Education - Old Mutual

He worries that some retirement savers may have payouts less than SASSA grant recipients.

Scroll up to the audio player to listen to the interview.