Vickie Lange, Head of Best Practice at Alexforbes

Alexforbes has released key insights and trends from the implementation of the two-pot retirement system, a significant change to South Africa’s retirement fund sector introduced on 1 September 2024. The system aims to enhance the financial well-being of retirement fund members by balancing long-term savings with short-term financial needs.

Insights are based on a comprehensive survey of over 8,200 responses and data analysis covering over one million members.

Transformative impact

By allowing access to a portion of savings for financial needs while preserving the remainder for retirement, projections indicate that retirement outcomes could improve by 2 to 2.5 times for new members under this system.

Claims analysis

Data has revealed key trends:

• Claims volume: By 30 November 2024, more than 348,000 claims had been submitted, amounting to over R6.5 billion. Approximately 65% of these claims were submitted in September 2024. Over 97% of savings pot claims were processed by 30 November, with an average processing time of eight working days. By 30 January 2025, the number of claims had risen to more than 370,000, with a total value exceeding R7 billion. The high volume of claims highlights the immediate financial needs of members and reinforces the importance of effective digital platforms and administrative capabilities.

• Age distribution: 76% of claims were from members aged 31-51, highlighting significant financial responsibilities in this age group.

• Financial vulnerability: 59% of claims were from members with fund credits under R250,000, and 94% were from those earning salaries below R550,000, demonstrating that financial needs often outweigh the benefits of preserving savings for retirement.

Claims were observed across all sectors, with the following distribution:

• 24% from wholesale and retail trade
• 10% from mining
• 9% from manufacturing
• 2% from professional and business services
• Other sectors ranging from 2% to 8%

These findings highlight varying financial behaviours and needs across different industries.

Member engagement

Digital platforms and services have played a key role in providing information and support, leading to increased member engagement:

• Over 550,000 views and 1.8 million interactions on the My Money Matters toolkit
• More than four million logins to AF Connect, the member portal
• 20,000 participants in webinars
• 259,000 calls and emails managed by call centres

These channels have enabled members to access information and advice, receive retirement benefits counselling, and make informed decisions about their savings.

Survey findings

Balanced utilisation: 54% of respondents accessed their savings pot, while 46% did not, indicating informed decision-making. This suggests growing trust in the two-pot system as a tool to balance retirement savings with immediate financial needs.

Satisfaction: 86% of claimants were satisfied with their decision, indicating that the system is meeting the expectations of most members. Survey feedback suggests a generally positive experience with the claiming process. Alexforbes remains committed to improving member experience further.

Understanding and awareness: 96% of respondents understood the long-term impact of withdrawals and tax implications. Engagement before implementation contributed to building trust between members and their retirement funds.

Future claims: 47% of members plan to claim in the future, with 34% of previous claimants intending to claim again. Among those who did not make an initial claim, 33% do not plan to claim, while13% are considering it.

Usage of savings: 80% of claimants used their withdrawals for debt repayment and essential living expenses. Of these, 50% repaid debt, while 30% covered essential costs. Other uses included major purchases (13%), financial investments, home improvements, medical bills, education and vehicle maintenance (7%). These findings indicate that members are prioritising financial stability when accessing their savings. Given this trend, debt solutions and rewards programmes could provide additional value to members, helping them better manage their finances while preserving long-term savings.

Workplace resources and trusted advice: 59% of members accessed information through their workplace, including the My Money Matters toolkit. Additionally, 50% consulted professional advisory services, highlighting strong trust in employer-sponsored resources. A smaller proportion (32%) turned to media and social media, while 13% relied on family and friends for information. These insights reinforce the importance of effective communication and support from retirement funds and their service providers.

Looking ahead

The two-pot system has proven to be a crucial financial resource, enabling members to manage financial challenges while preserving most of their retirement savings. Alexforbes remains committed to supporting members through innovative solutions and exceptional services.

ENDS