Edward Kieswetter’s R3.6 billion two-pot bonanza

Alexforbes announced that it has paid over R3.6 billion to the South African Revenue Service (SARS) on behalf of its members who withdrew from their two-pot retirement funds.

The asset manager has processed and paid more than one million two-pot withdrawal claims since the system was introduced in September 2024.

On average, Alexforbes clients claimed over R14,000 per withdrawal, and cumulatively paid more than R3.6 billion in tax.

South Africa’s two-pot system was introduced as a way to protect South Africans’ retirement savings, thereby improving retirement outcomes while still allowing them to withdraw in times of need.

Under the two-pot system, South Africans’ retirement savings are split into a savings “pot” and a retirement “pot”.

Retirement fund members can withdraw up to a third of their savings from the savings pot annually, while the other two-thirds are kept in the vested retirement pot.

This retirement pot remains inaccessible until the member reaches retirement age, which is intended to ensure that a significant portion of their savings is preserved for retirement income.

Prior to the implementation of the new retirement savings system, South Africans were warned of the significant tax implications of withdrawing from their savings pots.

This is because savings pot withdrawals are taxed at an individual’s marginal tax rate, i.e., the rate South Africans pay on their income.

In a recent press release, Alexforbes revealed that the one million withdrawals made by its clients under the new system amounted to more than R3.6 billion in payments to SARS.

This represents only a fraction of SARS’ total tax take from the two-pot system to date, with the taxman having collected an estimated R41 billion in additional personal income tax in 2024 alone.

The image below, courtesy of Allan Gray, shows how South Africans’ retirement savings are split under the two-pot system.

Retirement fund members continue cashing out

There was an initial flood of withdrawal claims when the two-pot system was introduced in 2024, and the start of this tax year has been no different.

Alexforbes previously said it saw over 140,000 claims during the first week of March, which marked the start of the 2026 tax year.

Alexforbes’ head of solutions enhancement, Vickie Lange, said the first claim was submitted at 00:01 on 1 March.

In its most recent press release, the firm said that from the start of the new tax year to 27 March 2026, it had received more than 210,000 savings pot claims.

This, Alexforbes said, matched volumes seen in September 2024 when the two‑pot regime was first implemented.

Interestingly, the firm also found that many of these withdrawals came from the same clients as the previous year, meaning many members are making repeated use of the savings pot feature. 

Alexforbes reported that 67% of members who claimed in the 2025 tax year submitted another claim in 2026.

In addition, 38% of members who claimed in the 2026 tax year have already submitted an additional claim in the first month of the 2027 tax year.

The firm also reported that 31% of its members who claimed in the 2025 tax year have made withdrawals in all three tax years to date.

“These trends point to strong awareness of the two‑pot system and a clear appetite among retirement fund members to access cash on a recurring basis,” the firm said.

It said this sustained demand has continued despite the immediate tax implications associated with withdrawals and the long‑term impact on retirement savings and future investment growth.

However,  Alexforbes Corporate’s head of solutions enhancement, Vickie Lange, said that, over time, the two-pot system is still expected to lead to improved retirement outcomes compared to the previous system.

This is because the new system requires members to preserve their retirement pots for the long term.

Previously, many members would withdraw their full retirement savings when changing jobs, harming retirement outcomes over the long term.

“The combination of limited accessibility through the savings pot and compulsory long‑term accumulation through the retirement pot strikes an important balance for South Africa’s retirement fund members,” Lange said.