{"id":837506,"date":"2025-09-18T12:39:52","date_gmt":"2025-09-18T10:39:52","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=837506"},"modified":"2025-09-18T12:41:13","modified_gmt":"2025-09-18T10:41:13","slug":"south-africans-are-keeping-the-economy-afloat-by-spending-their-pensions","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/837506\/south-africans-are-keeping-the-economy-afloat-by-spending-their-pensions\/","title":{"rendered":"South Africans are keeping the economy afloat by spending their pensions"},"content":{"rendered":"\n

A prominent economist has warned that South Africa’s economy is staying afloat by citizens sending their pensions, not because of productive growth.\u00a0<\/p>\n\n\n\n

South Africa\u2019s two-pot retirement system, which came into effect on 1 September 2024, was designed to give retirement fund members some access to their savings while making sure that most of the money stays preserved for retirement. <\/p>\n\n\n\n

One-third of monthly contributions go into a savings pot, which allows for emergency withdrawals. The other two-thirds go into the retirement pot, which cannot be touched until retirement.<\/p>\n\n\n\n

Over the past year, South Africans have withdrawn more than R9.5 billion from their savings pots, mainly to pay off debt or cover basic living costs.<\/p>\n\n\n\n

SARS initially forecasted to collect R5 billion in extra tax from two-pot withdrawals during the 2024\/25 financial year. <\/p>\n\n\n\n

However, by the end of February 2025, collections had reached R12.9 billion, more than double the estimate.<\/p>\n\n\n\n

Stanlib chief economist Kevin Lings said South Africa\u2019s fragile economic growth is being propped up these consumers dipping into their retirement savings, a trend he warned is unsustainable without a serious turnaround in investment.<\/p>\n\n\n\n

\u201cRight now, we\u2019re really playing with small numbers, and a lot of it is because the consumer\u2019s got this two-pot withdrawal,\u201d Lings explained. <\/p>\n\n\n\n

\u201cIn other words, they\u2019re taking money out of their long-term savings. We think this year they\u2019ll take another R25 billion. They\u2019ve already done a portion of that.\u201d<\/p>\n\n\n\n

According to Lings, the first year saw withdrawals of about R47 billion in total, and this year\u2019s total is expected to exceed R25 billion. <\/p>\n\n\n\n

\u201cAs that money comes out of long-term savings, it is tending to go into shopping. Basically, we\u2019re taking long-term savings and turning it into shopping,\u201d he said.<\/p>\n\n\n\n

This injection of cash has provided some relief to retailers and given the economy a short-term lift. <\/p>\n\n\n\n

Large-scale investment desperately needed in South Africa <\/h2>\n\n\n
\n
\"\"<\/a>
Stanlib chief economist Kevin Lings<\/em><\/figcaption><\/figure><\/div>\n\n\n

However, Lings cautioned that it is masking deeper structural weaknesses. <\/p>\n\n\n\n

\u201cObviously, it helps you, right, because you get some buoyancy in retail and then, if you get a cut in rates or inflation stays low, that helps you,\u201d he explained. <\/p>\n\n\n\n

\u201cHowever, we\u2019ve got to understand where it\u2019s coming from. It\u2019s not driving employment growth, it\u2019s not driving fixed investment and expansion. It\u2019s not the best way to grow your economy.\u201d<\/p>\n\n\n\n

Growth figures underline this point. South Africa\u2019s economy expanded by 0.8% in the second quarter, up from 0.2% in the first quarter, with retail sales providing most of the momentum. <\/p>\n\n\n\n

Year-on-year growth, however, sits at just 0.6%. \u201cThink about it, the economy is treading water,\u201d Lings said.<\/p>\n\n\n\n

\u201cIncome per capita continues to decline, which means the purchasing power of the average South African continues to go backwards, which is terrible actually.\u201d<\/p>\n\n\n\n

Exports remain under pressure, largely due to failing infrastructure, with logistics bottlenecks and unreliable rail and port systems stifling trade. <\/p>\n\n\n\n

At the same time, South Africa remains highly import-dependent, undermining domestic industry. \u201cThis infrastructure is just not helping us,\u201d Lings said. <\/p>\n\n\n\n

\u201cThe infrastructure to get the commodities to whichever harbour we\u2019re using is not functioning nearly as well as you would want, and that undermines our export performance.\u201d<\/p>\n\n\n\n

He stressed that the only way to turn the economy around is through large-scale investment. <\/p>\n\n\n\n

\u201cIn order to get that better news, there\u2019s no doubt we\u2019re going to need more investment spending, fixed investment in infrastructure that would help enormously, some form of expansion in the private sector.\u201d <\/p>\n\n\n\n

\u201cIf we got those numbers, then I think we\u2019d be talking about a more buoyant economy with more durability in terms of the growth cycle.\u201d<\/p>\n\n\n\n

Until then, South Africa\u2019s economy will keep treading water, Lings warned, and for now is being kept afloat not by productive growth, but by households cashing in their pensions.<\/p>\n","protected":false},"excerpt":{"rendered":"

A prominent economist has warned that South Africa’s economy is staying afloat by citizens sending their pensions, not because of productive growth.\u00a0<\/p>\n","protected":false},"author":92,"featured_media":825249,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[2720,853,1482,19264],"class_list":["post-837506","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-gdp","tag-south-africa","tag-stanlib","tag-two-pot-retirement-system"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837506","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=837506"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837506\/revisions"}],"predecessor-version":[{"id":837874,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837506\/revisions\/837874"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/825249"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=837506"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=837506"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=837506"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}