Anna Siwiak, Head of Product Development at Sanlam Umbrella Solutions

The 2026 National Budget speech marked 18 months since the implementation of the two-pot retirement system. After an initial wave of savings pot withdrawals, a clear – and positive – trend has emerged.

“The two-pot system’s forced preservation has ensured that members are preserving their retirement benefits,” says Anna Siwiak, Head of Product Development at Sanlam Umbrella Solutions. “We have seen this with a significant increase in our in-fund members who are choosing to retain their retirement pots in the Sanlam Umbrella Fund.”

Previously, retirement fund members could access their retirement savings in full when they changed employers. “In South Africa, where people in the formal sector change jobs every three years on average, many fund members fell to the temptation of cashing out early,” says Siwiak.

The two-pot system has changed this. Rather than withdrawing their savings in full, retirement fund members are now compelled to preserve the money in their retirement pot – with far-reaching effects on fund members’ long-term retirement outcomes. “Withdrawing your retirement savings early creates a permanent financial setback,” warns Siwiak. “You’ll feel it immediately in the tax penalty, and over the longer term, the loss of compounding interest on your investments will have a serious negative impact on your financial outcomes at retirement.”

However, simply preserving the money in the retirement pot is not enough to ensure a comfortable retirement. The Sanlam Umbrella Fund encourages its members to preserve their full benefits (including the retirement and savings pots), by remaining fully invested as paid‑up members at employment exit, or by transfering their savings to another retirement fund or their new employer’s fund, rather than cashing out.

This directly addresses one of the biggest sources of leakage in retirement savings. “When members retire, they can choose phased retirement or in-fund annuity options,” Siwiak says. “These let them delay making decisions and keep their money invested with ongoing oversight. The pricing for these In Fund options (available to all members who exit employment) is very competitive compared to other retail offerings.”

As a leading large umbrella retirement fund, Sanlam has a “big-picture” view of how working South Africans have been engaging with their retirement funds and utilising the two-pot system. “One of the key trends we observed was high initial utilisation of the savings pot, especially among lower-income and financially stressed members,” says Siwiak. “This confirms that liquidity needs were previously not being met.”

Some of the most noticeable impacts of the two-pot system have been among two cohorts of retirement fund members: younger members and those changing jobs.

Since the September 2024 implementation of the two-pot system, Sanlam Corporate has seen a marked increase in member engagement through digital channels and education platforms. “Access to liquidity has prompted more members to interact with their retirement savings,” says Siwiak.

The evidence is clear: Sanlam saw an 84% increase in registrations on the Sanlam Umbrella Fund Member Portal following the implementation of the two-pot system. “Calls received by our Call Centre increased 3.8-fold immediately after the two-pot system’s effective date,” Siwiak adds. “Another spike followed in March to June 2025, with incoming calls averaging about 30% higher than pre-two-pot levels. This reflects a strong surge in member engagement.”

“The two‑pot system has increased awareness of retirement savings among our younger members,” says Siwiak. “We support this by offering direct digital balance access, sending reminders tied to life events, and providing default options that function automatically, without requiring strong financial knowledge early on.”

Other observed trends reveal the cosmopolitan nature of umbrella funds. “Members are using the savings pot in different ways,” says Siwiak. “Some are using their savings pot as genuine emergency funding, while others are treating it as an extension of their short-term cash flow. At Sanlam, we have noticed that short-term financial pressures often take priority over long-term planning, especially for lower-income members. Many members also have low financial confidence, which makes them less likely to become involved in retirement decisions.”

Siwiak says that Sanlam will continue to monitor the impacts – both expected and unexpected – of the two-pot system on its Umbrella Fund members’ retirement savings. “We analyse member behaviour and decisions at pivotal moments in their retirement journey,” she says. “This includes tracking how many members preserve savings when they change jobs, how they use their savings and retirement pots under the two-pot system, and how their behaviour shifts regarding withdrawals, investment choices, and retirement timing.”

For many South Africans, retirement savings are their most valuable financial asset. “By mandating responsible behaviour – including the preservation of savings – the two-pot system is designed to improve retirement fund members’ long-term outcomes and help them secure their financial futures,” Siwiak concludes. “We’re already seeing its positive effects.”

ENDS