{"id":854671,"date":"2026-03-25T13:43:27","date_gmt":"2026-03-25T11:43:27","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=854671"},"modified":"2026-03-25T13:43:33","modified_gmt":"2026-03-25T11:43:33","slug":"double-blow-for-pension-fund-members-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/wealth\/854671\/double-blow-for-pension-fund-members-in-south-africa\/","title":{"rendered":"Double blow for pension fund members in South Africa"},"content":{"rendered":"\n

South Africans with retirement funds have been warned about the long-term consequences of withdrawing from their two-pot funds, especially amid current market volatility. <\/p>\n\n\n\n

Retirement funds were subject to new legislation in 2024, when the two-pot system came into effect, allowing limited access to funds while ensuring that the majority of funds remain untouched. <\/p>\n\n\n\n

The two pots include a savings pot, into which one-third of retirement savings are placed, and a retirement pot that holds the remaining two-thirds.<\/p>\n\n\n\n

Ninety One’s Jaco van Tonder said that the start of the new tax year has triggered a fresh wave of withdrawals from the savings pot under South Africa\u2019s two-pot retirement system. <\/p>\n\n\n\n

Pension fund administrators have reported that requests began almost immediately after the new tax year opened this month. <\/p>\n\n\n\n

Van Tonder said that this reflects two things: retirement fund members are under real financial pressure, and the withdrawals appear to be concentrated among repeat users of the system. <\/p>\n\n\n\n

“While the behavioural pattern is understandable, the timing of this year\u2019s withdrawals could hardly be worse,” he said.<\/p>\n\n\n\n

“Towards the end of February, the market backdrop looked relatively constructive. South Africa\u2019s Budget was broadly well-received, and sentiment towards local assets had improved.”<\/span> <\/p>\n\n\n\n

However, the conflict in the Middle East following America and Israel’s attacks on Iran and the Persian nation’s retaliatory strikes has led to a sharp spike in oil prices and risk-off sentiment. <\/p>\n\n\n\n

This has led many portfolios to experience meaningful declines over the period. This has two major problems for members. <\/p>\n\n\n\n

They are not only reducing their retirement savings, but are doing so in a period when markets have already fallen. This means that the losses are locked in for the investor. <\/p>\n\n\n\n

“The mathematics of investing makes this particularly damaging. If a portfolio loses 50%, it doesn\u2019t require a 50% gain to recover. It requires a 100% gain.”<\/p>\n\n\n\n

“By withdrawing after a drawdown, investors reduce the capital base and increase the return required to rebuild their retirement savings.” <\/p>\n\n\n\n

Van Tonder said this pattern reflects a classic behavioural finance mistake, in which investors feel they must react to volatility. <\/p>\n\n\n\n

This desire to do something can lead to long-term wealth losses. Withdrawing from equity-based investments after a market decline is one of the most common and costly examples. <\/p>\n\n\n\n

Long-term pain <\/h2>\n\n\n
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Jaco van Tonder – Advisor Services Director – Ninety One Investment Platform<\/figcaption><\/figure><\/div>\n\n\n

Even when market volatility is ignored, repeated withdrawals from the savings pot can carry a massive long-term cost. <\/p>\n\n\n\n

All withdrawals reduce the capital that would otherwise compound over decades. Withdrawing from the savings pot consistently before retirement can reduce an investor’s eventual nest egg by around a third. <\/p>\n\n\n\n

“That is the real long-term risk embedded in the system. The two-pot structure was designed to provide flexibility during financial hardship, but frequent use undermines retirement security,” said Van Tonder.<\/p>\n\n\n\n

“If two-pot withdrawals become a regular habit rather than an emergency measure, the gap between what people save and what they need for retirement will widen even further.” <\/p>\n\n\n\n

He added that periods of market turbulence are uncomfortable, but they are a normal part of long-term investing. <\/p>\n\n\n\n

Markets have experienced many short-term shocks for decades, such as oil price spikes, inflation scares and recessions. Over time, they recover and move higher. <\/p>\n\n\n\n

“The key principle for long-term investors remains unchanged: stay invested, avoid locking in losses, and allow time and compounding to do their work.”<\/p>\n\n\n\n

“For retirement savers considering a two-pot withdrawal right now, the most important question is simple: Is this truly necessary?”<\/p>\n\n\n\n

Timing the market is extremely difficult when investing. However, withdrawing during market stress is often the exact opposite of what one should do to build wealth. <\/p>\n\n\n

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\n","protected":false},"excerpt":{"rendered":"

Ninety One says that retirement fund members who have withdrawn from their two-pot funds since the start of the month will be dealt a double blow. <\/p>\n","protected":false},"author":95,"featured_media":812750,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9880],"tags":[19703],"class_list":["post-854671","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth","tag-ninety-one-2"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/854671","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\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=854671"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/854671\/revisions"}],"predecessor-version":[{"id":854687,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/854671\/revisions\/854687"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/812750"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=854671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=854671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=854671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}