The rise of early withdrawals: insights from South Africa's Two-Pot retirement system

The survey also found that 43% of respondents saw the average age of members making withdrawals fall between 30 and 40 years, suggesting that mid-career individuals, often under financial pressure or facing changing life circumstances, are more likely to use the savings withdrawal option. While the system provides flexibility, experts warn that early withdrawals can erode long-term retirement capital, making effective communication vital to prevent irreversible damage to financial security.

Meanwhile, as the new tax year began in March 2026, NMG Benefits reported a surge in withdrawal activity. Since the system’s inception, the company has processed 113,640 savings withdrawal applications, with 13,555 submitted in the first two weeks of March alone. To date, R1,060,513,746 has been paid out to members.

Siphamandla Buthelezi, COO and executive head of platforms at NMG Benefits, says the trend reflects both financial realities and the growing adoption of digital platforms. “As we kickstart the new financial year in South Africa, we are seeing members accessing their savings pot earlier than in previous years. While the two-pot retirement system provides valuable flexibility during times of financial strain, it remains important for members to remember that these withdrawals come directly from their long-term retirement savings,” he explains.

Digital channels have played a central role in this uptake. More than 93% of March 2026 withdrawal requests were processed through NMG’s WhatsApp-based functionality, which includes validation checks, automated processing, and real-time notifications. “Digital engagement has been critical in allowing us to manage these volumes efficiently,” adds Buthelezi.

Alexforbes also recorded sharp activity at the start of the tax year. More than 140,000 claims were received in the first week of March, with approximately 84,000 already paid. The first claim was submitted at 00:01 on March 1, underscoring the urgency of access. Activity was driven largely through the AF Connect digital platform, which logged over 1.3 million visits during the same period.

“The early response to the new tax year highlights that many members require prompt access to their savings. It also demonstrates the importance of reliable digital systems that can process high volumes of claims quickly and accurately," says Vickie Lange, head of solutions enhancement at Alexforbes. 

Alexforbes says it has strengthened its systems, updated member information, and expanded digital tools to meet demand. The organisation says it has also increased operational capacity to manage higher claim volumes, while reminding members that withdrawals are subject to tax and will reduce retirement savings. 

PERSONAL FINANCE

South Africa’s two-pot retirement system, introduced on September 1, 2024, continues to reshape the way members engage with their retirement savings, according to PwC's latest report.

The framework allows individuals to access up to a third of contributions made after its introduction for emergencies, without having to resign from their jobs. PwC notes that this shift has had a significant impact across the retirement industry.

“In our survey, 46% of the participants indicated that less than 10% of their members accessed their savings benefits in the first year of implementation. By the second year, 54% of respondents reported that less than 10% of members had taken withdrawals,” says Julanie Basson, retirement funds leader, PwC South Africa.