Bertie Nel, Head of Financial Planning and Advice at Momentum
The Two-Pot retirement system has given many South Africans access to much needed cash to some of their retirement savings but also revealed a worrying reality: for many South Africans, these retirement savings have become their emergency fund. As withdrawals continue, the real question is no longer whether people should be accessing their retirement savings, but why so many are relying on it to meet short-term financial needs.
As many South Africans continue to withdraw from their Two-Pot savings component, an important question begs an answer: Is the problem access to retirement savings, or are South Africans not saving enough for emergencies?
“The narrative that withdrawals are bad is too simplistic,” says Bertie Nel, Head of Financial Planning and Advice at Momentum. “We need to ask why so many South Africans are forced to access a portion of their retirement savings in the first place?”
Treating retirement as a financial tool
Early conversations around the Two-Pot retirement system primarily focused on how low-income earners could use a portion of their retirement savings to fund basic household needs. However, data from Momentum reveals that South Africa’s wealthier earners are now accessing money from their Two-pot savings component at nearly four times the rate seen during the initial rollout phase.
More significantly, their behaviour reflects calculated financial planning rather than immediate survival. A distinct segment of affluent investors deliberately sat out the final months of the previous tax cycle in January and February 2026. They waited for the start of the new cycle in March to claim in a coordinated surge, maximising their withdrawal limits based on a larger accumulated seed pot.
When high-net-worth individuals treat a retirement preservation mechanism as a flexible short-term financial instrument, it reveals the lack of separate, accessible, and dedicated rainy-day cash reserves is a vulnerability that spans all income brackets but also raises concerns about having enough money for retirement.
The psychological drivers behind the pull
To better understand these behavioural patterns, researchers have examined who is withdrawing from their Two-pot savings component, and why.
A 2026 study that introduced the concept of the Momentum Money Fingerprint, examining how money attitudes influence financial decisions, was published in the Journal of Consumer Behaviour by Momentum’s Head of Behavioural Finance, Paul Nixon and Stellenbosch University’s Evan Gilbert. It used structural equation modelling (SEM) to evaluate the psychological factors that influence early retirement fund withdrawals.
The research found that “money prudence”, which is a person’s tendency to budget, plan ahead and understand the consequences of financial decisions, is the strongest factor preventing early access to retirement savings. In contrast, individuals who experience higher levels of financial anxiety are more likely to withdraw funds to relieve immediate financial pressure.
The study further found that emotionally stable and financially confident individuals may be more willing to access their retirement savings when they believe the decision is calculated and manageable, a trend that aligns with the behaviour observed among some higher-income earners.
The findings highlight that withdrawal decisions are not only driven by financial circumstances, but also by people’s attitudes towards money. “Many consumers do not fully appreciate the long-term impact of these withdrawals,” says Nel. “Withdrawals are taxed at an individual’s marginal tax rate, which can significantly reduce the value of their retirement savings compared to the tax benefits available at retirement.”
Building a real rainy-day strategy
“What we are seeing in the post-implementation era of the Two-pot retirement system is that retirement funds are increasingly being used as emergency savings because many South Africans do not have separate, accessible cash reserves,” says Nel.
“When financial emergencies arise, accessing a savings pot often feels like the easiest option. However, it gradually erodes the capital needed to fund a secure retirement.”
“Financial advisers have an important role to play in helping their clients to build healthy savings habits. Encouraging them to build up dedicated emergency savings separate from retirement funds can provide greater financial flexibility when unexpected costs arise. In addition, tools that help them track and visualise their long-term financial goals can support better decision-making and reinforce the value of preserving retirement savings for its intended purpose,” says Nel.
The ultimate goal of the Two-Pot retirement system was to foster preservation. Achieving it requires a shift in behaviour: recognising that true financial health is built by creating independent, accessible short-term buffers so that retirement capital can do what it was designed to and remain untouched.
ENDS
