The opening of the 2026/27 tax year has brought renewed focus on South Africa’s two-pot retirement system, with early data from major administrators showing another surge in withdrawal activity.
Since its introduction on 1 September 2024, the system has been closely monitored to assess whether it can balance short-term access with long-term preservation. Designed to reduce full cash-outs at job changes, it allows limited access to savings while preserving the bulk for retirement.
Early industry-wide estimates, cited by banks and retirement fund administrators, pointed to millions of claims and tens of billions of rands paid out across funds in the first months after implementation.
The retirement system allows members to access up to one-third of new contributions through a savings pot, while preserving the remaining two-thirds in a retirement pot. A once-off seed capital allocation of 10% of existing savings, capped at R30 000, was introduced at implementation. Members are permitted one withdrawal per tax year, subject to a minimum withdrawal of R2 000. Withdrawals for the current tax year opened on 1 March 2026.
Early surge in claims across providers
The opening of the new tax year triggered immediate withdrawal activity across administrators.
Momentum recorded 38 148 claims in the first 11 days of March, representing 8.6% of its FundsAtWork umbrella fund membership.
Alexforbes reported more than 140 000 claims submitted in the first week of March, with about 84 000 already paid. The first claim was logged at 00:01 on 1 March.
Vickie Lange, the head of solutions enhancement at Alexforbes, said: “The early response to the new tax year highlights that many members require prompt access to their savings.”
Repeat withdrawals becoming entrenched
Across providers, withdrawal behaviour is increasingly recurring rather than once-off.
Momentum’s data shows that only 5% of claims submitted since 1 March are first-time withdrawals. About 33% are second withdrawals, while 62% are now third withdrawals.
Among those accessing funds, most are withdrawing their full available savings pot.
Sanlam data reflects a similar pattern. Danie van Zyl, the head of the Smoothed Bonus Centre of Excellence at Sanlam Corporate, said that in 2025, roughly 75% of claimants were repeat users.
Old Mutual’s survey data supports this trend. Lizl Budhram, the head of advice at Old Mutual Personal Finance, said nearly 80% of members who have already withdrawn expect to withdraw again, with 79% of those who withdrew to settle debt anticipating repeat withdrawals.
The data across providers indicates that once members access the system, they are likely to return annually.
Withdrawal size, profile and fund impact
Withdrawal values remain relatively modest across providers.
Momentum reported that 71% of claims are below R10 000, with the average claim declining from R12 666 in September 2024 to R9 290 in March 2026.
Between September 2024 and December 2025, Sanlam processed more than 300 000 claims, paying out about R4.6 billion. For that period, Sanlam reported an average claim of just over R15 000.
Van Zyl said withdrawal activity is concentrated among members aged 35 to 44, and that significantly more men than women are withdrawing.
However, it seems that despite the volume of claims, the impact on fund assets remains limited. Momentum reported that while 33.7% of members have made at least one withdrawal, the cumulative impact on assets is about 1.97%.
Liquidity pressure driving behaviour
Across providers, withdrawal activity is linked to financial strain.
Momentum’s analysis indicates that nearly half of South African households would struggle to cover an unexpected expense without borrowing or accessing savings.
Eighty20’s 2025 fourth-quarter data shows that 40% of credit-active consumers are in default on at least one loan, with overdue balances increasing by R12bn over the period.
Sanlam Corporate’s head of investments John Anderson, in comments reported by the Sunday Times, said these pressures are shaping behaviour.
“Rising living costs and debt forced difficult trade-offs. When school fees or bond instalments are past due, preserving retirement savings can feel like a luxury.”
Broader system leakage and emerging risks
Leakage from the broader retirement system remains a concern.
Sanlam Corporate data, reported by the Sunday Times, indicates that about 50% of South Africans are cashing out retirement savings when changing jobs, up from 37% two years ago.
This trend sits alongside rising savings pot withdrawals and may compound long-term erosion of retirement savings.
Digital systems absorbing demand
Administrators are processing high volumes through digital channels.
Momentum reported that 98% of claims were submitted digitally, with 88.6% of valid claims paid within the first week of March.
Alexforbes recorded more than 1.3 million logins on its AF Connect platform during the same period.
These figures point to strong system capacity, even as demand remains elevated.
Long-term risk: erosion of retirement outcomes
The primary concern across providers is the cumulative effect of repeated withdrawals.
Van Zyl described his “big concern” as behavioural, warning that the system risks encouraging annual withdrawals rather than emergency use.
Momentum noted that repeated withdrawals reduce the compounding effect that underpins retirement outcomes.
Old Mutual framed the issue in advice terms.
Budhram said: “When you’re pulled in many directions at once, another withdrawal can feel like the quickest solution, but good financial advice helps you step back, weigh the trade-offs, and avoid undoing years of disciplined retirement planning.”
She added: “The reform works when the preserved portion has time to grow. But once withdrawals become habitual, families erode the benefit the system is designed to deliver.”
Sanlam’s Anderson warned of the longer-term implications: “These behaviours could push many South Africans’ affordable retirement age beyond 80, despite stronger market performance in 2025.”
He added: “Every time savings are accessed early the engine of compound growth is dismantled.”
Shift from access to advice
The system is moving into a phase where behaviour and outcomes are the primary focus.
Old Mutual emphasised the role of advice in guiding decisions, including assessing necessity, alternatives, tax implications and long-term impact.
“The Two-pot system provides useful flexibility, but another withdrawal in the new financial year could set families back more than they realise,” Budhram said.
For FSPs, the system is functioning operationally, but behavioural risks are becoming more pronounced. Managing those risks through advice, communication and product design will be central to preserving long-term retirement outcomes.
