South African pensions being raided
South Africans are raiding their pension funds to survive the cost of living in South Africa, which experts say is a concerning trend that is likely to continue.
According to the South African Reserve Bank, South Africa’s personal savings rate fell to -1.4% of disposable income in the fourth quarter of 2025, which is the worst level since 2016.
This means South Africans are collectively spending more than they earn. Roughly 40% of urban working households have no formal retirement savings, and around 50% of low-income workers have no savings at all.
JSE-listed financial services group Alexforbes recently announced that it has processed and paid more than one million savings pot withdrawal claims since 2024, when the system was introduced.
The average amount claimed from each savings pot withdrawal is over R14,000, and 67% of members who claimed in the 2025 tax year also submitted claims in 2026.
Speaking in an interview with Moneyweb Radio, Vickie Lange, Corporate Head of Solutions Enhancement at Alexforbes, said the data is concerning.
“South Africans are increasingly dipping into their retirement savings just to stay afloat, with billions of rand being withdrawn as financial pressure continues to mount,” she said.
“What was meant to secure long-term stability is now being used as a short-term survival tool.” Lange described the trend as deeply concerning, and warned that it raises broader questions about both household finances and the system itself.
“It’s worrying. It’s raising serious concerns about whether the system itself is working or whether households are simply running out of options,” she said.
Asked whether South Africans are effectively liquidating their retirement savings just to get through the month, Lange acknowledged that the situation is severe.
According to survey data, the bulk of withdrawals are being used out of necessity rather than choice.
“80% of members using their savings pot withdrawals are using it to cover their debt and essential living expenses,” Lange explained.
The system still needs time to work
Despite the alarm, Lange added that the new system still represents a major improvement on the previous regime. Under the old system, members could cash out all their savings when changing jobs—something many did.
In contrast, the new framework preserves most contributions. “Two-thirds of contributions are going towards the retirement pot and have to remain invested until the point of retirement,” she said.
She also noted that the system is expected to deliver two to 2.5 times better retirement outcomes than the old regime.
Despite this, Lange stressed that retirement savings should not become a go-to source of liquidity.
She highlighted that 31% of the members claiming in the 2025 tax year have had to claim again and again—up to three times from their retirement funds.
This pattern may point to behavioural risks within the system. “Maybe members are not considering other options before the retirement fund, and maybe it’s become a little bit too easy to get access,” Lange said.
Despite these concerns, Lange maintains that structurally the system remains sound. “We’re very confident that the two-part regime will ultimately deliver better long-term outcomes,” she said.
She did, however, acknowledge that improvements may be needed over time. “We need to think about whether further enhancements can be made to the system,” she said.
Lange also warned that South Africa’s retirement crisis will not be solved overnight. “Currently, only around 6% of South Africans are in a position to afford retirement,” she said.
Because of this, she added that the benefits of the new system will take time to materialise. “We’re still going to see poor retirement outcomes for a while until the two-part system has been in place long enough.”
For now, Lange does not expect withdrawal behaviour to change significantly in the near term. “This pattern or trend of repeat withdrawals is likely to continue rather than not into the future,” she said.
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