South African fund members have shown major interest in accessing their retirement savings through the two-pot retirement system, but what is the long-term impact?

According to John Anderson, Executive: Solutions & Enablement, Alexforbes, withdrawing from the two-pot retirement system can impact your long-term retirement savings.

Anderson said that withdrawing from the savings pot means reducing the capital that will compound over time to give you financial security in retirement.

He said, "Members should carefully assess whether they genuinely need the funds or if alternative financial solutions are available."

More withdrawals in the new tax year

According to Alexforbes, now that South Africa has entered the new tax year, fund members may withdraw from this savings pot of the two-pot retirement system again.

Alexforbes has received more than 33,000 savings pot withdrawal claims from members and 260,000 logins on their digital platform since March 1, 2025.

Their research has also shown that members who claimed in the previous tax year had a high likelihood of claiming again in the new tax year.

This high level of claims so early in the tax year once again indicates that many South Africans are financially stretched. However, indications from banks suggest that some individuals are using the withdrawals for consumption.

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While the two-pot retirement system offers fund members financial relief from short-term financial constraints, members are urged to consider the long-term impact of withdrawing from their retirement savings.

Fund members should also remain vigilant against cybercrime threats.

Considerations before withdrawing

Tax consequences

Money that is withdrawn from the savings pot is subject to taxation as part of a member’s annual income.

"This could result in a higher tax bracket and an increased tax liability. Members are encouraged to seek financial advice to fully understand the implications," Anderson said.

Cybercrime and fraud

With heightened activity around withdrawals, scammers and fraudsters may increasingly target retirement fund members. Alexforbes strongly advises members to:

- Only use official platforms like AF Connect to process their claims.

- Never share your personal information, including your banking password or OTPs, with anyone claiming to assist with withdrawals.

- Be cautious of unsolicited and unexpected messages or emails that appear to come from financial institutions.

Be responsible

The introduction of the savings pot is a positive step toward financial flexibility for South Africans. However, its success depends on responsible use. Alexforbes urges all retirement fund members to consider their long-term financial well-being, carefully evaluate their need for immediate withdrawals, and take the necessary precautions to protect themselves from cyber threats.

SARS and two-pot withdrawals

Earlier this year, the South African Revenue Service (SARS) announced that it received 2,664,279 applications for tax directives for withdrawals from the new retirement system.

According to the tax authority, of the total number of applications, 2,403,379 tax directives were authorised for funding release, and a total gross lump sum of R43.42 billion had been paid out.

The remaining applications were rejected ed for various reasons, including erroneous identity numbers and tax numbers, among others.

SARS has also warned taxpayers that before the final sum is paid to the applicant, the pension fund will be advised to deduct any outstanding debt on behalf of the tax authority before distributing the finances to a member.