R57 billion has been paid out so far since the two-pot retirement system was implemented in 2024.
The jury’s still out – and probably won’t be in for at least another decade or two – on whether the two-pot retirement system will be of long-term benefit, or not, to South African workers.
Prof Lucien van der Walt, director of Neil Aggett Labour Studies Unit at Rhodes University, makes a good point when he observes that the R57 billion paid out so far to people accessing their retirement funds has helped people to escape the current tough financial times and that is “better than being trapped in a downward spiral of financial instability and losses”.
Previously, “many people quit their jobs so that they could access their retirement funds, often leaving them broke later, and on the small government old age pension system,” he added.
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However, we wonder how many people used the money to bail them out from the poor choices which got them into debt.
Taking that money would also negatively affect long-term savings for retirement.
Will the two-pot system actually help to inculcate a savings culture in a country where “live for today and to hell with tomorrow” is almost the national motto?
However, what is clear is that there needs to be better financial education in our schools.
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