South Africans have been withdrawing from their retirement funds. Picture: Thomas Trutschel/Getty Images
It’s just five weeks since the two-pot pension fund system was implemented, and billions have been withdrawn.
The rush for fast money goes to show how many people are struggling to make ends meet. While this cash injection might help them survive now, the long-term effects are still to be determined.
Taking money earmarked for your retirement will always impact your finances down the line.
Lize de la Harpe, senior legal advisor at Sanlam Corporate, perhaps said it best when she warned last week that people have to think long and hard before they decide to make early pension withdrawals.
She said: “The two-pot retirement system is a game-changer, providing access to funds for urgent financial pressures, but we must also think beyond today. Are we solving today’s problems at the cost of tomorrow’s security?
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“Understanding how the two-pot retirement system works is critical to making smart, informed decisions that protect your short-term needs, as well as your long-term financial well-being.
“Each decision, especially deciding whether to withdraw funds now, can significantly affect your future financial security.”
A week ago, The Citizen reported that “retirement fund members had so far applied to withdraw R4.1 billion from their savings components”, following statistics released by the SA Revenue Service.
According to Discovery’s Corporate and Employee Benefits team, “22% of the total eligible retirement fund member base opted to make a withdrawal during September”.
Guy Chennells, chief commercial officer at Discovery Corporate and Employee Benefits said: “This figure emphasises the pressure SA’s ‘sandwich generation’ faces. Increased debt and other cost-of-living pressures which have devastated household finances.”
The bulk of South Africans really are stuck between a rock and a hard place.
NOW READ: Two-pot retirement system: FSCA and Sars progress after two weeks
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