A year after the introduction of the Two-Pot Retirement System, both administrators and members are beginning to see its impact more clearly. At a recent EBnet-hosted discussion, industry leaders reflected on the system’s progress, challenges, and the long-term benefits it could bring for South Africans’ retirement security.

Systems Improving After a Rocky Start

The early stages of implementation were marked by significant system challenges, but much has changed over the past year.

Siphamandla Buthelezi, Executive Head of Platforms and Deputy COO at NMG Benefits, shared that:

“Last year the system really struggled to handle the Two-Pot. But what we’ve seen this year is that everyone has done some work around improving their own systems. We’re now sitting at 90% of our claims coming in online. Where we are a year later is a massive improvement.”

Mike Prinsloo, Head of Product at Alex Forbes, agreed, noting that more than 90% of total Two-Pot claims are now being submitted digitally, clear evidence of the sector’s progress.

What Members Are Asking

While systems have improved, members remain focused on issues such as accessibility, withdrawal limits, tax clarity, and the long-term effect on their pensions.

Joey Sankar, Executive of Pension Administration at EPPF explained:

“It started off with members wanting to know about increased or flexible withdrawal limits. The first questions were, ‘Can we go beyond the R30,000? What happens immediately after the R30,000? And how soon can we do the next withdrawal?’

The whole industry was grappling with that, because while members understood the limited amount available, they also wanted to know if their immediate needs could be covered with the short-term availability of funds.

The second big issue was around tax calculations. Members were very clear and adamant about this. For many, it came as a bit of a surprise. SARS did a great job in setting up the online system, but it became clear that there was a strong need for transparency and a better understanding of how tax was being calculated.

And finally, the most important question for us as a Fund was always, ‘What would be the impact on the future pension itself?’ Being a defined benefit fund, we had to look carefully at how withdrawals would affect years of service, pensionable salaries and ultimately the member’s retirement outcome.

For us, the solution was to double down on education. That became the first port of call and the key to helping our members make informed choices. With continuous education and engagement, we’ve managed to overcome this hurdle, and to date, approximately 50% of our active workforce have already made use of the Two-Pot withdrawal.”

Prinsloo added that the most common question his team receives is simple: “What is my balance?” followed closely by queries about tax implications.

Listen to Joey Sankar on Two-Pot:

Short-Term Needs vs. Long-Term Impact

Although many members are accessing their Two-Pot funds to address immediate financial pressures, the system has also sparked a shift in long-term retirement outcomes.

Guy Chennells, Chief Commercial Officer at Discovery Corporate and Employee Benefits, observed:

“People are using it to make ends meet, paying off short-term debt or getting out of big trouble that they’re in. But that’s not really the purpose of the Two-Pot.”

He went on to highlight the potential long-term benefits of the reform:

“A stroke of the pen legislation has completely shifted the dynamics of where people will get to with their retirement funds. Under the old system, a typical worker would achieve a 20% replacement ratio. Under Two-Pot, even with poor behaviour, they will achieve a 40 to 48% replacement ratio. The country will be four times richer in 40 years’ time.”

Subedra Reddy, Executive Head of Actuarial Services at NBC Holdings, echoed this sentiment, urging members to view the system as a tool for long-term improvement rather than a quick fix:

“A lot of people are using that money for day-to-day expenses. But it’s important to use the pot as a tool to improve financial outcomes, rather than using it incorrectly.”

Looking Ahead

The consensus among experts is clear: while many members are accessing funds out of necessity, the structure of the Two-Pot System is ultimately designed to create stronger retirement outcomes. 

Watch the full discussion here: https://youtu.be/5-rO9tllXJY