JOHANNESBURG - Most retirement fund members who have taken advantage of the two-pot system in the current tax year were dipping into their savings for the second time.
This is according to a member of the Actuarial Society of South Africa (ASSA) Retirement Matters Committee, Natasha Huggett-Henchie.
She says around 75% of applications in the current tax year were repeat claims.
Huggett-Henchie believes they did so to pay loan sharks because banks have not seen a big payment of loans and retailers haven't reported an uptick in sales.
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She also notes one retirement fund member who used her savings pot money to avoid taking a loan.
“A member of one of the funds we administer explained that every year, she would have to take out a loan to fund her children’s school fees.
“In January, she decided to borrow the money from her savings pot and repay it every month, just as she would have had she taken a loan.
“This way, the money is still there for next year’s school fees, and she is no longer in debt,” Huggett-Henchie explains.
She says those who have made their second withdrawal early this tax year will have to wait until March 2026 before they can dip into their savings again.
She cautions many who will still make withdrawals: “Every time you make a withdrawal now to fund something other than an emergency, you must understand that you are reducing your future emergency fund.
“If you empty your savings pot every year, you will effectively have reduced your retirement savings by one-third, which is significant,” she says.