<\/p>\n
Almost two years after the implementation of the\u00a0two-pot retirement system, the conversation has moved beyond withdrawal statistics and tax implications to something more profound: human behaviour.<\/p>\n
The two-pot system is designed to give South Africans access to a portion of their savings in case of emergency, while preserving the retirement pot and thereby helping them save more.<\/p>\n
When the system was introduced in September 2024, industry expectations were for a staggered pattern of withdrawals: some right away, then a lull, then a spike around \u2018Janu-worry\u2019, followed by another tax-related spike in March. But that\u2019s not what happened.<\/p>\n
\u201cWe didn\u2019t see the behaviours we were expecting,\u201d says Michelle Acton, chief customer officer at Old Mutual Corporate.<\/p>\n
On one hand, preservation has improved by a significant 33% since the inception of the two-pot system.<\/p>\n
This means that more retirement fund members are leaving their retirement money invested when they change jobs instead of cashing it out, and it suggests that the two-pot system\u2019s responsible flexibility can still improve retirement outcomes over time.<\/p>\n
But many of those who could, dived in right away \u2013 and they did so across all income levels, fund values, and ages.<\/p>\n
\n\u201cWe had savings-pot withdrawals from people who earn more than R140 000 a month. This means they were being taxed at 45% on the portion they pulled out, yet they still withdrew it.\u201d<\/p>\n<\/blockquote>\n
Many members didn\u2019t hesitate to withdraw, suggesting that South Africans are struggling to make ends meet \u2013 and when financial distress is high, urgency trumps strategy.<\/p>\n
\u201cFinancial stress drives behaviour more than long-term planning considerations,\u201d says Blessing Utete, managing executive of Old Mutual Corporate. \u201cIt doesn\u2019t matter how much you earn \u2013 all that goes out the window if you\u2019re taking financial strain.\u201d<\/p>\n
The industry initially focused on operational readiness and volumes. What has emerged is a real-world experiment in behavioural economics. The experience after more than a year and a half suggests immediate financial stress and short-term needs frequently outweigh long-term retirement goals.<\/p>\n
\nRecent discussions hosted by Old Mutual Corporate have explored how neuroscience and behavioural science help explain these decisions.<\/p>\n<\/blockquote>\n
The research shows that financial choices are shaped by emotions, cognitive biases, reward-seeking behaviour, and individual personality traits \u2013 rather than purely rational calculations.<\/p>\n
Old Mutual Corporate has found that two-pot claims are primarily used for basic living expenses (34%), debt repayment (26%) and emergencies (26%) \u2013 in other words, for financial necessities rather than discretionary spending.<\/p>\n
\u201cThe two-pot system has given us a unique window into how South Africans actually make financial decisions under pressure. It\u2019s not just about numbers. It\u2019s about understanding the human behind the decision,\u201d says Acton.<\/p>\n
Financial stress significantly influences withdrawal behaviour. When people face immediate cash needs for medical bills, school fees or debt, the emotional weight of the present often overrides the abstract future benefit of retirement savings preservation.<\/p>\n
This aligns with behavioural economics principles such as hyperbolic discounting, where people value immediate rewards more highly than larger future ones.<\/p>\n
Behavioural biases<\/strong><\/p>\n
The withdrawal patterns observed in Old Mutual\u2019s data are consistent with several well-established behavioural biases that influence financial decision-making:<\/p>\n
\n
- Present bias<\/strong>: Prioritising immediate relief over future security.<\/li>\n
- Loss aversion<\/strong>: The pain of not having money now feels stronger than the future benefit of saving.<\/li>\n
- Mental accounting<\/strong>: Treating the savings pot as \u201cfound money\u201d rather than retirement capital.<\/li>\n<\/ul>\n
Old Mutual\u2019s analysis has identified distinct \u201cfinancial personas\u201d among members, each responding differently to the two-pot option.<\/p>\n
These include:<\/p>\n
\n
- The<\/strong> Preservers<\/strong>: Members who view retirement funds as strictly untouchable and have opted out of making any withdrawals.<\/li>\n
- The Serial Claimers<\/strong>: People for whom access equals action; they withdraw the maximum allowable amount every year.<\/li>\n
- The Contingency Withdrawers<\/strong>: Members who only dip into their savings pot for genuine emergencies, treating it as a personal safety net.<\/li>\n<\/ol>\n
Understanding these personas allows for more targeted communication and support. \u201cWe\u2019ve seen that one-size-fits-all communication doesn\u2019t work. People have different motivations, fears, and financial personalities. The more we tailor our approach, the better the outcomes,\u201d adds Acton.<\/p>\n
The Competition Commission\u2019s September 2025\u00a0Cost of Living report\u00a0found that the average worker spends over 57% of their income on transport and electricity. It\u2019s easy to see why financial planning and saving may feel like luxuries.<\/p>\n
This weighs heavily on the shoulders of South African savers.<\/p>\n
\nThe first 21 months of two-pot have shown that education and communication are critical. Simple, timely, and personalised messages can improve preservation rates.<\/p>\n<\/blockquote>\n
Employers and retirement funds that invest in behavioural nudges \u2013 such as default preservation options, clear comparisons of short-term versus long-term outcomes, and regular financial wellness check-ins \u2013 are seeing better results.<\/p>\n
The two-pot system has also highlighted the importance of building financial resilience before a crisis hits. Members with emergency funds or better cash-flow management are far more likely to preserve their retirement savings.<\/p>\n
The road ahead<\/strong><\/p>\n
While the two-pot system was designed to encourage preservation of retirement savings while providing flexibility during tough times, the data suggests more needs to be done to encourage long-term thinking.<\/p>\n
The real value lies in using these insights to design better communication strategies and support systems that work with, rather than against, human nature.<\/p>\n
\u201cThe two-pot system hasn\u2019t just changed how we save. It has shown us how we actually behave with money. If we want better financial outcomes, we need to design solutions that understand people first,\u201d adds Acton.<\/p>\n
The first 21 months of two-pot have been a powerful behavioural case study. The challenge now is to turn these insights into meaningful improvements in financial wellness and retirement outcomes for all South Africans.<\/p>\n
Brought to you by <\/em>Old Mutual Group Communications<\/em>.<\/em><\/p>\n
Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.<\/em><\/p>\n<\/p><\/div>\n
#twopot #system #taught #financial #behaviour<\/p>\n","protected":false},"excerpt":{"rendered":"
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