{"id":866115,"date":"2026-07-16T09:21:01","date_gmt":"2026-07-16T07:21:01","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=866115"},"modified":"2026-07-16T09:21:04","modified_gmt":"2026-07-16T07:21:04","slug":"warning-over-the-two-pot-retirement-system-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/866115\/warning-over-the-two-pot-retirement-system-in-south-africa\/","title":{"rendered":"Warning over the two-pot retirement system in South Africa"},"content":{"rendered":"\n

The two-pot retirement system has been live for two years, but a risk remains that South Africans will view their nest eggs as ordinary savings rather than long-term investments. <\/p>\n\n\n\n

The two-pot retirement system launched in 2024 and introduced a retirement and a savings pot, with the latter accessible before retirement. <\/p>\n\n\n\n

The retirement pot, which must hold at least two-thirds of all retirement savings, will be accessible only upon retirement. <\/p>\n\n\n\n

Thys van Zyl, Chief Executive Officer of Everest Advisory Services, said that much of the debate surrounding the two-pot system has focused on the wrong issue.<\/p>\n\n\n\n

Van Zyl said that the system was introduced to address the practical challenges faced by many retirement fund members. <\/p>\n\n\n\n

Many had previously had limited access to their retirement savings without requiring them to resign to unlock their pension benefits. <\/p>\n\n\n\n

“The real risk emerges when retirement savings are viewed as an easy source of cash rather than money specifically set aside to fund retirement,” said Van Zyl. <\/p>\n\n\n\n

Van Zyl says the system was designed to strike a balance between short-term financial pressure and long-term retirement planning.<\/p>\n\n\n\n

“For many households, the savings component provides much-needed financial relief when unexpected expenses arise,” he added. <\/p>\n\n\n\n

“That does not mean, however, that every withdrawal is a sound financial decision. Every time money is withdrawn, that capital potentially loses the opportunity to generate compound growth over many years.”<\/p>\n\n\n\n

Not just one withdrawal <\/h2>\n\n\n
\n
\"\"<\/a>
Thys van Zyl, Chief Executive Officer of Everest Advisory Services<\/figcaption><\/figure><\/div>\n\n\n

Van Zyl said the greatest risk is not a single large withdrawal but rather a series of smaller withdrawals over time. <\/p>\n\n\n\n

While many people assume that small withdrawals make little difference, repeated withdrawals can have a major impact on one’s eventual retirement savings over several decades. <\/p>\n\n\n\n

“Financial security is rarely destroyed by one major decision; it is more often gradually eroded by many small decisions made over the course of years,” said Van Zyl. <\/p>\n\n\n\n

The long-term consequences facing South Africans can be seen in foreign markets, most notably in Chile.<\/p>\n\n\n\n

During the COVID-19 pandemic, Chilean workers were allowed to withdraw substantial amounts from their pension funds to ease financial hardship. <\/p>\n\n\n\n

Van Zyl noted that millions of Chileans had depleted a significant portion of their retirement savings and that future pension income had declined considerably. <\/p>\n\n\n\n

The South American country’s government was then forced to provide greater financial support to retirees.<\/p>\n\n\n\n

Van Zyl warned that the impact of compound growth is often understated, with every withdrawal not just taking that money out but also all future growth it could have generated. <\/p>\n\n\n\n

He said that individuals approaching retirement age should carefully consider the long-term impact of their withdrawals. <\/p>\n\n\n\n

“Many South Africans in this age group have already lost retirement savings during their working lives due to changing jobs, difficult economic circumstances or interruptions in contributions,” he said.<\/p>\n\n\n\n

“They simply have less time to recover those losses through compound growth. Every additional withdrawal can therefore have a far greater impact on their financial security in retirement.”<\/p>\n\n\n\n

He said that South Africa needs to place greater emphasis on financial literacy, stronger incentives to preserve retirement savings, and policies that encourage people to save more for retirement. <\/p>\n\n\n\n

“The objective is not to deny people access to their savings, but to ensure that short-term financial relief does not ultimately create long-term financial insecurity.”<\/p>\n","protected":false},"excerpt":{"rendered":"

The two-pot retirement system is intended to offer a lifeline to South Africans, but a major risk remains that people don’t keep their savings for the long term.<\/p>\n","protected":false},"author":95,"featured_media":866124,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2077654992903651663","_sma_x_attempts":1,"footnotes":""},"categories":[11121],"tags":[25738],"class_list":["post-866115","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-everest-advisory-services"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866115","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=866115"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866115\/revisions"}],"predecessor-version":[{"id":866125,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866115\/revisions\/866125"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/866124"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=866115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=866115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=866115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}