By Vickie Lange
Since the start of the new tax year on March 1, Alexforbes has observed a second wave of interest from retirement fund members in checking their balances and submitting savings pot claims.
Fund members may access their savings pots once every tax year, with over 400 000 having done so via Alexforbes between September 2024 and February 2025 during the first wave of withdrawals.
With the start of the tax year, an initial four-day surge saw 33 000 withdrawal claims sparking concerns that South Africans were dipping back into their savings pots at a rate similar to the first wave in September.
However, the daily volume of claims has since tapered off, with an additional 35 000 claims lodged over the past couple of weeks. To date, Alexforbes has successfully paid about 55 000 claims within seven working days, while the remaining claims continue to progress through the claims cycle.
The continued interest in the two-pot system is evident from a substantial spike in the logins to the Alexforbes member portal, AF Connect, which exceeded one million during this period compared to approximately 500 000 logins per full month in December, January and February. This surge suggests that members are actively checking their balances and may be considering whether to withdraw their savings pots at some point during the year.
While many members are making withdrawals, it is encouraging to see that a large proportion of those eligible have chosen not to do so. Instead, they are keeping their savings pots invested for retirement or emergencies – the original purpose of the savings pot component. This suggests that the significant efforts by employers, trustees and the industry to educate and support members is having a positive impact.
Therefore, we reaffirm our call for well-informed financial decision-making. While the savings pot offers members flexibility to manage financial emergencies, Alexforbes urges retirement fund members to carefully assess the long-term consequences of such withdrawals.
Members should consider:
- Preserving retirement savings: Withdrawals reduce the amount available for retirement, potentially leading to financial insecurity later in life. Members should only access these funds in cases of genuine financial emergencies.
- Understanding tax implications: All withdrawals are subject to taxation, which could impact a member’s overall tax liability. It is essential to plan accordingly especially given the static income tax tables as recently announced in the budget speech.
- Cybersecurity awareness: With heightened withdrawal activity, cybercriminals may increasingly target retirement fund members. To stay protected:• Only use official channels for transactions.• Never share banking details, OTPs or login credentials.• Verify the authenticity of any withdrawal-related communication before acting.
The two-pot system may evolve, as the Budget speech highlighted the exploration of policy adjustments to potentially allow retrenched members limited access to their retirement pots under strict but still-to-be-determined conditions. Currently, retrenched members can access their vested and savings components provided they have not already done so within the same tax year, but not the retirement component, as this remains preserved until retirement.
Retirement fund members should engage their retirement benefits counsellor about their options.
Lange is head of best practice at Alexforbes
PERSONAL FINANCE
