Two-pot retirement system: Thousands of claims, but some decide against it

After the two-pot retirement system was implemented last Sunday, thousands of pension fund members submitted their withdrawal claims, but interestingly, many who enquired decided not to claim after calculations showed that they would get very little out in the end.

Anneke Hanekom, head of reputation management and group CEO projects at Momentum, says many enquiring applicants decided against applying after they used the online calculators and asked their advisers and saw the large personal income tax amount they would have had to pay.

“For instance, assuming certain demographics and a tax deduction comprising 39% of the amount: if you had to borrow the amount, the loan would have carried an interest rate of 52.8% repayable over two years.”

Momentum received a total number of approximately 35 429 applications by Thursday, representing about 5% of In-force contracts. The cumulative amounts of withdrawals applied amounted to R8.6 million, excluding Metropolitan and Momentum Corporate.

“The large volumes of withdrawal requests placed a strain on our employees, but we put in extra hours and personnel to process requests, while our AI bots relieved much of the load.  We prepared well in advance of 1 September in anticipation of a higher than usual volume we would receive and we managed well.”

Hanekom says Momentum has been making payments since Monday, but updated figures are not available yet.

ALSO READ: Two-pot retirement system: The picture, four days in

Alexforbes: some problems, with over 560 000 online interactions about two-pot retirement system

John Anderson, executive for solutions and enablement at Alexforbes, says the company went live with the two-pot retirement system on 3 September and immediately began processing withdrawal applications.

“Despite thorough preparation and testing by Alexforbes and industry partners, the demand has significantly surpassed initial expectations. Typically, we process approximately 150 000 claims annually.

“However, on 4 September, the system experienced the same volume of login requests for claim submissions within just 25 minutes. Current estimates suggest that between R50 billion and R100 billion in savings pot withdrawals are anticipated in the coming months.”

Anderson says despite Alexforbes strengthening its digital infrastructure to handle the high volume of activity on AF Connect, the member portal and additional capacity in call centres, the company “regrettably experienced significant system challenges trying to process the unprecedented and overwhelming number of client requests”.

“Alexforbes apologises for any inconvenience caused by these issues. IT specialists are working diligently to improve the client experience and resolve these challenges. The organisation remains committed to supporting all clients during this transition and addressing initial issues with the highest priority.”

The first week of the two-pot retirement system has seen significant activity across various channels, Anderson says, with over 560 000 online interactions in less than a week and over 30 000 claims received in just three days, double the usual monthly volumes. Alexforbes is actively processing claims worth over R400 million.

ALSO READ: Two-pot retirement system: South Africans, unions unhappy about Sars’ tax deductions

Sanlam: 70 000 calls and 20 000 claims under two-pot retirement system

Nzwa Shoniwa, managing executive at Sanlam Corporate, says Sanlam received close to 70 000 calls at its various call centres this week and over 20 000 savings component claims via its portal and app in just the first two working days of September.

“This volume far exceeds the monthly average of 7 000 to 8 000 retirement, withdrawal, or retrenchment claims. The average claim amount remained steady at R20 000 over the two days.

“We know that South Africans are struggling financially given the current economic climate. The number of members resigning or being retrenched from their employers who encashed all or some of their retirement savings increased from 53% in 2022 to 72% in 2024.  “Of these members in 2024, 54% spent their encashed retirement savings on paying living expenses and reducing and settling debt.”

Shoniwa says roughly 1% of the tax directive requests to the South African Revenue Service (Sars) were rejected and for 13% of requests, Sars issued an IT88, which means that a member has outstanding tax from a previous period or has not submitted one or more annual tax returns for their personal taxes.

ALSO READ: Two-pot retirement system: before you withdraw, ask yourself

Old Mutual: doing it in two phases to prevent bottlenecks

Michelle Acton, retirement reform executive at Old Mutual, says the company has not yet started accepting withdrawal applications, which will begin in Phase 2 starting on 23 September.  “At this stage, we are seeing strong engagement through our WhatsApp portal, with over 200 000 customers interacting with the platform to check their balances and request a quote for the cost to withdraw.”

She points out that about 30% of their membership base does not qualify to withdraw, as their pot balances are currently below the R2 000 minimum withdrawal values. “However, over the next six months, we expect about 50% of our membership to apply for a savings pot withdrawal benefit.”

Action says Phase 1 has gone smoothly, with no major challenges. “Our proactive, phased approach helped us manage the high volume of customer inquiries while ensuring our systems are ready for Phase 2. By staggering the process, we reduced the risk of bottlenecks and delays once withdrawals begin.”

ALSO READ: Two-pot retirement system: impact on investors, markets and SA economy

NMG Benefits: 4 700 claims for about R60 million under two-pot retirement system

Siphamandla Buthelezi, head of platforms at the financial advisory firm, NMG Benefits, says so far they received 3 500 claims on their WhatsApp channel and about 1 200 manual application forms, a total of 4 700.

“So far, the amount requested via claims is R60 885 924.83. We only managed to pay one claim and the tax on that claim was R680.22. the majority of our claims are awaiting a directive from Sars.

“Due to high volumes, we experience problems with our systems being super slow and members were also frustrated with the slowness of the WhatsApp withdrawal portal.”

ALSO READ: Two-pot retirement system: Draw from your savings pot or get a loan?

Allan Gray and Liberty: high volume of queries and claims

Jonathan Turner, head of retail operations at Allan Gray, says so far, the number of withdrawal requests we have received has been in line with expectations, spiking on day 1 and moderating over the course of the week.  

Gurschell Neethling, divisional executive for operations at Liberty Corporate Benefits, says Liberty has already started successfully processing and paying two-pot savings withdrawal claims to its customers. “As anticipated, we are experiencing a high volume of queries and claims.”

Government Pensions Administration Agency: 36 000 claims under two-pot retirement system

Dr. Rakgwatha Mokou, manager for media and external stakeholder relations at the Government Pensions Administration Agency, says the agency received 36 465 applications/claims by Friday and the number changes very quickly.

“We are constantly managing and tuning our systems to manage the increased load for the two-pot retirement system, as well as the existing load on the self-service application. We are aware of members who have problems accessing the system and our teams are attending to the queries.”