Alexforbes retirement warning

With the start of the new tax year, the two-pot floodgates have opened once again, prompting experts to warn members against making early withdrawals that could damage their retirement savings in the long term.

This was explained by Vickie Lange, best practice head at Alexforbes, who said that since the start of the new tax year on 1 March 2025, Alexforbes has observed a second wave of interest from retirement fund members.

“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,” Lange said.

“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 2024.”

“However, the daily volume of claims has since tapered off, with an additional 35,000 claims lodged over the past 14 days.”

To date, Lange said that Alexforbes has successfully paid 55,000 claims within seven working days, while the remaining claims continue to be processed.

She explained that The continued interest in the two-pot system is evident from a substantial spike in the logins to the Alexforbes member portal, AF Connect.

During this period, logins exceeded one million, a significant increase compared to the roughly 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.”

Lange added that it is encouraging to see that while many members are making withdrawals, 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 are having a positive impact.”

With the new tax year, and the second wave of two-pot withdrawals starting, Alexforbes has reaffirmed its 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,” Lange said.

“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.”

For those who do make a withdrawal, Lange added that it is crucial to understand the tax implications thereof.

“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 is another important consideration since heightened withdrawal activity could lead to cybercriminals increasingly targeting fund members.

To stay protected, Lange said that members should only use official channels for transactions and never share banking details, OTPs, or login credentials.

Members should also always verify the authenticity of any withdrawal-related communication before taking action.

“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,” Lange explained.

“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.”