Why now may be the worst time to dip into your two-pot retirement savings

Hands off!

That's the advice being given to South Africans by personal finance journalist Maya Fisher-French when it comes to their two-pot retirement savings.

From 1 September 2024, employees have been able to access limited portions of their pensions without resigning.

ALSO READ: Two-pot retirement withdrawals surpassed R21bn in less than 2 months - SARS

But despite the warnings not to touch their savings, many South Africans are increasingly accessing funds through the two-pot system.

But Fisher-French says many are withdrawing at the wrong time and for the wrong reasons.

She explains why.

“A lot of people were desperate and waiting for the first of March as the new tax year, and they knew they could dip into their savings pot and pay off some of their debt, and they did so."

ALSO READ: Things you SHOULDN'T do when the two-pot retirement system comes into law next month

But the new tax year also happened to coincide with the market crashing, triggered by geopolitical tensions and rising oil prices, notes Fisher-French.

"War was declared on Iran, oil prices skyrocketed, our markets were down 10%, it was absolutely the worst time to withdraw."

The system was designed to help people in emergencies, yet many are using it to pay off debt or cover everyday expenses.

Fisher-French says the analysis from pension funds of exactly who is withdrawing makes for interesting reading.

Research shows a growing number of South Africans plan to withdraw repeatedly, raising further concerns about retirement outcomes.

"Many of them were the same people. They withdrew when the seed capital was in, then they withdrew again on 1 March 2025, then again on 1 March 2026. I think this pattern is one we need to start watching."

For many people, they are surviving on credit cards throughout the year, and then using the money withdrawn from the two-pot system to settle those debts, explains Fisher-French.

“What we're not doing is sitting down and saying, 'Why am I constantly living in debt?'"

Some estimates suggest early withdrawals could reduce savings by as much as a third over time.

To listen to Maya Fisher-French in conversation with CapeTalk’s John Maytham, use the audio player below: