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

702 and CapeTalk's Stephen Grootes is joined by Natasha Huggett-Henchie, a consulting actuary and member of the Actuarial Society of South Africa’s Retirement Matters Committee.

Listen below:

Despite advice to the contrary, it seems many South Africans are choosing to withdraw cash from their retirement funds under the two-pot system.

Interestingly, many are using the money to service debt or pay off loan sharks.

ALSO READ: Top reasons SAns are withdrawing savings under two-pot system - Discovery

"This is anecdotal, but the evidence seems to suggest that it has disappeared, as it were... that seems to be where it's going."

- Natasha Huggett-Henchie, Retirement Matters Committee - Actuarial Society of South Africa

Hugget-Henchie says it's encouraging that people are using the money to clear debt rather than splashing out on luxuries.

"That's the right way to use the two-pot system, reduce your debt or borrow from yourself rather than from a loan shark or a formal lending institution for lower rates."

- Natasha Huggett-Henchie, Retirement Matters Committee - Actuarial Society of South Africa

The new two-pot 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, people withdrew R103 million from their savings pots, highlighting the financial struggles of South Africans.

ALSO READ: 'You’re robbing yourself when you take two-pot retirement money'

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