Preservation of savings has risen: Experts say retirement component preservation is expected to increase
Withdrawals from the two-pot retirement system which came into effect in September 2024 amounted to R57 billion by June this year, a report by financial services group Liberty has shown.
This was an accumulation of four million withdrawals from members, while around R15 billion in taxes was collected by the South African Revenue Service over the period.
The two-pot retirement system was created to let members access part of their savings before retirement.
Before 1 September 2024, the only way a person could dip into their retirement annuity fund was if they lost their job, got divorced or retired. After the change, investors are able to draw up to R30 000 from their retirement savings, although they will incur taxes.
In essence, contributions to retirement annuity funds are now divided into two “pots”, one containing a third of the savings, which can be drawn before retirement, and a second preserving two-thirds which can only be tapped into after.
During the new tax year, around 478 000 members withdrew money, Liberty said. Data shows that there was a surge in withdrawals when the system initially kicked in, but this had slowed by the start of 2025.
“The numbers tell us that we saw a surge in the first three months — 55% of our claims coming through in the first three months — and then 45% in the next nine months,” said Fahiem Esack, Liberty lead specialist of operations, analytics and insights.
“We saw a spike in March 2025 when members were eligible to claim again with the new tax year, and strangely enough we saw a slight surge in September as I think people were under the impression that if they were allowed to claim in September 2024, they would be able to claim again in September 2025.”
There has been an increase of over 10 times in terms of the number of members preserving their retirement fund benefits and a 75% increase in the amount of benefits preserved within the retirement funds, statistics from Liberty show.
“The sheer increase in the amount of participation of people — 10 times as much in terms of the number of people preserving compared to before — is hugely encouraging because we are encouraging that culture and that behaviour around putting money away so that wealth is building up,” Liberty head of investment and benefit consulting John Taylor said.
The savings component claims values is likely to stabilise in the next few years and the retirement component preservations is expected to continue increasing in magnitude as more months of contributions are accumulated, Liberty said.
Over the period, Liberty paid out 83% of claims, of which 16% were declined, Esack said.
The insurer said 37% of savings claims were paid to people in their 40s and 38% of claims were paid to people in their 30s, while the average gross value of a claim being paid is approximately R11 500.
More claims were paid to men at 54% compared to females at 46%.
“Transactional data indicates a large share of withdrawals went to settle outstanding debt; concurrently, used-car registrations spiked in September to October 2024 (highest since 2012), suggesting deposit-funded vehicle purchases, while retail trends show modest essential-goods spend and typical seasonal patterns otherwise,” the report said.
The insurer added that 59% of active members have not touched their savings pot, which they attribute to increased awareness around the importance of the preservation of funds.