The Two-Pot system has reshaped how employees engage with their retirement savings, prompting business leaders to support them in balancing immediate needs with long-term security, says Michelle Acton, Chief Customer Officer at Old Mutual Corporate.

As early trends under the Two-Pot Retirement System begin to emerge, employers must reckon with a difficult reality: current financial wellbeing strategies may need to be rethought to truly support their employees' financial security. While workers are engaging with their retirement savings, they’re doing so under financial pressure — and often without the support they need to make sustainable long-term decisions.

According to Old Mutual Corporate’s 2025 Member Two-Pot Withdrawal Survey, 45% of retirement fund members who accessed their savings did so to service debt. Another 35% used funds to cover everyday expenses such as groceries, school fees, and rent. More than 70% said they would withdraw again — with tax implications, not preservation concerns, acting as the primary deterrent.

We’ve also seen a significant increase in Savings Pot claims at the start of the new tax year, despite only small amounts being available for access. Of the 441,000 Savings Pot claims submitted since the system’s inception, 121,000 — or roughly 28% — were made in the new tax year alone, from 1 March 2025 onwards. This confirms the earlier finding: employees will withdraw again if they can, due to financial stress.

These trends have raised questions about financial literacy. But this interpretation risks overlooking a deeper issue. Employees are not irrational — many are simply financially overwhelmed. They’re not failing to plan; they’re struggling to survive.

A Long-Term Win Revealing Short-Term Strain

It’s easy to interpret high withdrawal rates as a failure of the Two-Pot system or a lack of engagement with the reform. However, this overlooks the core intent of the policy. One of its most important features is that members can no longer cash out their full retirement benefit when changing jobs — historically the biggest destroyer of retirement outcomes in South Africa.

Old Mutual’s own modelling shows that the system improves long-term outcomes, particularly by closing this critical preservation gap. But it also surfaces a more sobering truth: many South Africans simply do not earn enough to save and preserve simultaneously. No amount of financial education can change that without acknowledging it first.

This reality is reinforced by the Remchannel April 2025 Salary and Wage Survey, which clearly illustrates the extent of income strain. Despite the inflation rate easing to approximately 3% and average salary increases surpassing this rate at 5.82%, employees continue to experience financial pressures due to rising living costs, particularly for essential goods and services.

For many households, the salary increases provided are insufficient to absorb the escalating living expenses or reduce debt, let alone support long-term savings. People are making tough choices — not careless ones.

Structural Reform, Lived Strain

It’s easy to misread this as a failure of financial education. But employees aren’t being careless — they’re making rational trade-offs in tough conditions. The Two-Pot system rightly limits full withdrawals upon job changes, which Old Mutual’s modelling shows will improve long-term outcomes. Yet it also highlights a more sobering truth: many South Africans simply don’t earn enough to save and preserve simultaneously.

The Remchannel April 2025 Salary and Wage Survey supports this. Despite inflation easing and salaries increasing slightly, the rising cost of essentials means employees remain under pressure. For most households, these increases barely cover basic needs, let alone allow for retirement savings. People are making deliberate decisions in the face of impossible trade-offs.

A Public Shift — and a Knowledge Gap

Social media traction — from TikTok debates to cheeky brand nods by Nando’s — shows that retirement savings are no longer distant concerns. They’ve become immediate, and in many cases, accessible. But that visibility has also revealed a knowledge gap. Some members only realised they had been receiving tax relief when SARS taxed their withdrawals — a moment that exposed how invisible the benefits of long-term saving can be until they’re lost.

This suggest that employees don’t fully grasp the trade-offs involved in early access — not because they don’t care, but because traditional financial education has missed the mark.

This isn’t about correcting ‘bad behaviour’ or blaming a lack of planning. It’s about recognising that financial information, as it’s often delivered, feels abstract, moralistic, or disconnected from the realities of living paycheque to paycheque. To be useful, financial education must reflect people’s lived experience and offer practical, usable support — not just advice, but options that people make the most of what they have.

Here are several ways employers can now design financial wellbeing strategies that are not only more empathetic, but more effective:

• Sustained Financial Education: Financial wellbeing is an ongoing journey. One-off workshops aren’t enough. Regular, accessible education helps employees stay engaged with their long-term financial goals, even in times of immediate financial stress.
• Provide Practical Tools: Offer resources like budgeting tools or financial coaching to help employees manage both their immediate financial needs and their long-term savings goals.
• Create a Culture of Openness: Encourage open conversations about money within the workplace. When leadership shares their own financial experiences and challenges, it sets the tone for employees to engage without fear of stigma.
• Integrate Money Matters into Wellness Programmes: Expand employee wellbeing to include financial health. Host monthly “money clinics” with benefit consultants or financial coaches as part of existing wellness sessions.
• Use Workplace Data to Personalise Communication: Work with administrators to segment communication and interventions by life stage, salary band, or prior withdrawal behaviour — so the right message reaches the right employee at the right time.

The Two-Pot system represents a significant shift in how retirement savings are managed, with the potential to improve long-term financial outcomes. However, it also reveals the short-term financial stress many employees face today. As employers, there’s an opportunity to support employees through these challenges by offering ongoing financial education and resources, helping them secure their financial futures while enhancing overall employee engagement and wellbeing.