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The government’s proposed “two pot” retirement scheme system has been welcomed in some quarters and criticised in others – an indication that it will never be all things to all people.
The idea is to tackle the massive, critical, national problem that just 6% of South Africans save enough to live comfortably in retirement.
The two-pot retirement system divides retirement fund contributions into a retirement pot and a savings pot.
The retirement pot will hold two-thirds of contributions and will be strictly preserved for retirement, while consumers will be able to access the savings pot, holding the remaining one-third, before retirement to use the money for financial emergencies.
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The worry among many experts is that financially hard-pressed South African workers – and that is the majority of us – might view the smaller pot as a way to easily access money to help them in their daily struggles to keep their heads above water.
But, even small, regular withdrawals from that second pot will make a material difference to the amount of money eventually available at retirement, meaning the country overall might be little better off in the end.
It is clear people must be educated about the need to take a long-term view of savings.
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