South Africa’s middle class is turning to a last resort
South Africa’s middle-class households are emerging as the biggest withdrawers of two-pot retirement savings, taking the money to cover their basic needs as financial pressures mount.
According to Momentum Corporate’s Nashalin Portrag, this has been a surprising revelation in the two years since regulations were changed to allow access to these savings.
When the two-pot retirement system was introduced, many had assumed that withdrawals would be evenly distributed across all income groups, Portrag said.
However, two years later, it turns out that middle-income households are most often dipping into the funds.
Portrag said this boils down to the rules of the system itself, which requires that a minimum of R2,000 be held in savings to make a withdrawal.
“Many lower-income and emerging middle-class members can’t withdraw at all because their savings fall below the R2,000 minimum required by law,” Portrag said.
“Middle-class members, on the other hand, usually have enough saved to draw on, which turns their retirement savings into a backup emergency fund when the cost of living keeps rising.”
Momentum carried out a survey of South Africans withdrawing from their pots, revealing that the money isn’t being funnelled into ‘wants’, like holidays or luxuries, or into other investments.
Instead, most of the money is being used for everyday living expenses or to relieve other pressures like debt.
This is an indication of “real financial pressure”, the group said, with many turning to their retirement savings to survive today.
“People aren’t withdrawing to pay for holidays or investments but to survive: 44% of withdrawals go toward paying off debt, 23% to cover everyday living expenses, and 20% toward education,” the group noted.
Before the system launched, many expected an even split between paying off debt and building savings.
Instead, rising interest rates, inflation, and existing debt repayments have pushed people toward using their two-pot savings simply to stay afloat.
“For the established middle class in particular, salary increases are not keeping up with debt and rising costs,” Portrag said.
“Once other options, such as credit cards, loans, and family support, run out, retirement savings become the last resort.”
Robbing your future self
Portrag noted that the data shows a gap in what people intend to do with their two-pot savings and what actually happens.
In 2025, 74% of members said they would only access their savings component in a real emergency.
By 2026, however, only 48% of eligible members had not made a withdrawal. That’s a 26% gap between ‘good intentions’ and financial reality.
“Age and life stage also matter,” he said, noting that mid-career millennials, for example, are most likely to make repeat withdrawals as they juggle home loans, debt, and raising children.
Gen X members tend to withdraw once and stop. Baby Boomers are the most likely to leave their savings alone, aided by greater financial stability and proximity to retirement.
The data show that South Africa’s middle class and middle-income households face future challenges.
According to Thys van Zyl, Chief Executive Officer of Everest Advisory Services, the system was designed to strike a balance between short-term financial pressure and long-term retirement planning.
While this alleviates pressure in the short term, every time money is withdrawn, that capital loses the opportunity to compound over many years.
The greatest risk is not a single large withdrawal but rather a series of smaller withdrawals over time, he said.
If people pull from their retirement savings now, it leaves less in the pot when they actually retire, potentially increasing the burden on the state to cover them.
More encouragingly, Momentum noted that, of those who withdrew, 45% only did so once, and 10% say they won’t withdraw again.
“Many members have learned, after seeing tax deducted and their long-term growth shrink, that repeat withdrawals come at a real cost,” it said.
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