A VIEW OF THE WEEK: Two-pot system is hearty meal for some and just bones for others

It was the speculative whisper at dinner tables. Other times it was a loud declaration around the braai or chill spot: Someone we knew had resigned to access their pension fund.

Withdrawing from your retirement is not advised so it sometimes became a secret, often done but seldom spoken about or acknowledged.

The solution implemented to help stop this practice and preserve pension savings, the two-pot retirement system, began this week. It divides your savings into separate portions, or pots, that you can and can’t access until retirement.

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It is a helpful way to offer relief to citizens crushed under the weight of a cost of living crisis, and the initial response to the system shows there are many.

Flood of withdrawals

Financial services provider Old Mutual estimated as much as 600 000 withdrawal claims would be made from this week, while several administrators’ systems seemed to crash under the weight of enquiries.

The SA Revenue Service (Sars) reportedly processed almost 2 500 tax withdrawal directives on the first day of the two-pot system going live. Hundreds of thousands more requests are expected to flood in when other funds end their staggered approaches to claims.

While the hope is that such withdrawals will be used to lighten financial burdens, the fact that the national savings rate was only 0.5% in 2023 suggests that for many it will be merely another payday, rather than a medium-term financial shot in the arm.

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Two-pot hope replaced by anger

And while it may feed many, there may also be skeletons unearthed at the bottom of the two-pot system.

Municipalities and the ANC itself are among the high-profile organisations that have been exposed for deducting pension contributions from their workers without actually investing it in a fund. This despicable act is not reserved for government and politics alone, but is a practice too often found in the private sector.

For the many who will fall victim, the joy of possible relief is replaced by disappointment and anger at the corrupt.

Fund administrators and government feast off your money

The taxman and fund administrators will be among those eating well from the pot, taking advantage of the desperation.

While some funds will charge just over R250 in fees to withdraw, others like Alexander Forbes will charge 2%. This could see them make R600 off each transaction and hundreds of millions in total.

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Sars is also at the table smiling, in some cases taking more than a third of the withdrawal value in tax.

A recent estimation from the Reserve Bank found the two-pot system could boost the economy by 0.1 to 0.7 percentage points. It will also help the government service its debts, and theoretically free up some money for improved service delivery – if it can be kept out of the hands of the greedy and dishonest.

While already rich corporates and the corrupt are licking their lips, the desperate are grabbing onto whatever relief they can with the two-pot system.

And, in this economy, it is not them that should be the shame of the dinner table.