One Year of the Two-Pot Retirement System: What Really Matters

On 1 September 2024, South Africa entered new territory with the launch of the Two-Pot Retirement System. For the first time, members of retirement funds had partial access to their savings while still preserving the bulk for the long-term.

The intention was simple:

• Give people financial relief in tough times.
• Protect the majority of their money for retirement.

A year later, the results are mixed, and the noise around whether the system is “good” or “bad” has only grown louder. But beneath the headlines lies a deeper truth:

Retirement is not a policy; it’s a personal journey of discipline.

Why the Two-Pot System Was Introduced

South Africans have long wrestled with two realities:

1. Immediate financial pressure. Rising living costs, debt burdens, and emergencies left many households desperate for liquidity. In the past, the only way to unlock retirement savings was to resign. A drastic move with long-term consequences.
2. Poor retirement outcomes. Only about 6% of South Africans can maintain their standard of living in retirement. Too many people were cashing out their pensions early, eroding their future security.

The Two-Pot system aimed to create a middle ground: access without full erosion.

A Note on the “Three Pots”

Despite its name, the system actually has three components:

1. Vested pot: Your pre-September 2024 savings, ring-fenced and still governed by the old rules. Withdrawals here remain subject to existing preservation rules.
2. Savings pot – One-third of new contributions go here, accessible once a year (including the initial “seed” amount that was unlocked at the start). Withdrawals are taxed at your marginal income tax rate.
3. Retirement pot – Two-thirds of new contributions flow here, locked until retirement, ensuring long-term preservation.

Crucially, the pots are not equal in size. Over time, the retirement pot grows much larger than the savings pot by design. The idea is simple: give limited flexibility while keeping the bulk of your money secure for the future.

Yet if you look at many graphics in the media, the pots are often shown as two or three identical jars. That image is misleading. A more accurate picture is one large pot (retirement), one much smaller pot (savings), and the vested pot sitting separately to the side.

Each pot is also treated differently from a tax and practical perspective.

What Happened in Year One

The numbers show how quickly South Africans embraced the new rules:

• Within the first 10 days, approximately 160,000 applications were submitted, with roughly R4 billion withdrawn.
• By October 2024, withdrawals had surged past R22 billion.
• By February 2025, more than 2.4 million people had tapped their savings pots, totaling R43 billion.
• By mid-2025, the figure had climbed to nearly R57 billion across 4 million withdrawals.

The average first-time withdrawal was modest, around R13,000. For many, this went toward school fees, clearing debt, or weathering unexpected costs.

But modest amounts, withdrawn regularly, can add up to a significant dent in retirement security. Every rand taken out today is a rand that won’t compound tomorrow.

Who Benefits, Who Risks Losing

The system is not equally beneficial to all:

• Lower- and middle-income members gain most immediate relief. Instead of resigning or taking loans, they now have a safer outlet in emergencies.
• Higher-income members may see limited benefit. Many don’t need withdrawals, but funds face added complexity and costs to administer the system.
• Those close to retirement face the highest risk. With little time to rebuild, every withdrawal reduces long-term stability.

What It Teaches Us About Saving

Step away from the technicalities, and the real lesson is simple:

Retirement is not about systems or pots. It’s about habits.

If you save consistently, preserve what you can, and treat flexibility as a privilege, you’ll thank yourself in the decades to come. If you use every opportunity to dip in, you’ll face long-term regret.

Saving isn’t glamorous. It requires patience and vision. But it is the only way to secure dignity and freedom when your salary stops.

My Take

After one year, I see the Two-Pot system as necessary but incomplete.

It has eased hardship in an economy under strain. That relief is real, and for some, life-changing. But without financial literacy and personal discipline, it risks becoming a leaky bucket: helpful today, harmful tomorrow.

The responsibility is ultimately ours:

• Understand the difference between the three pots.
• Recognise that the pots are unequal by design.
• Use flexibility sparingly, and save with discipline.

Because no reform, no regulation, and no policy can replace the simple truth:

The habit of saving is the foundation of financial security.

Disclaimer

This article is provided for general information and opinion purposes only. I am not a licensed financial advisor. Nothing contained herein should be construed as financial, investment, tax, or retirement advice. Any individual considering changes to their retirement savings or financial plan should seek guidance from an authorised financial advisor or other suitably qualified professional.