Two Years of Two-Pot as a Survival Tool: 3 Questions to Ask Before You Cash Out

• Two Years of Two-Pot As A Survival Tool: 3 Questions to Ask Before You Cash Out
• Two years into two-pot, and the data shows that repeat withdrawals are climbing as consumers use their savings to bridge budget gaps and survive. Sebastien shares 3 questions to answer before withdrawing.

The two-pot retirement system turns two on Tuesday, and two years of claims data is quietly dismantling the predictions everyone made at its launch.

Withdrawals are overwhelmingly going towards debt, school fees and household costs, with only 4% spent on leisure and travel. Repeat withdrawals are also on the rise, as only 5% of claimants were withdrawing for the first time in Momentum’s March 2026 claims data.

Essentials, not indulgences

Sebastien Alexanderson, Head of National Debt Advisors, says claimant surveys from major providers including Discovery, Momentum, Sanlam and Old Mutual show that essential expenses dominate withdrawals.

Discovery Corporate and Employee Benefits found that withdrawals were mainly used for:

• Home or car expenses: 24%
• Short-term debt: 21%
• Education or school fees: 20%

In Discovery’s broader September 2024 to May 2025 data, education was the biggest expense at 25%, while leisure and travel accounted for just 4% and emergencies 2%.

Importantly, 61% of eligible members had not withdrawn at all.

Paying off expensive debt can make sense

Alexanderson says the 21% going towards short-term debt can be positive, particularly where consumers are paying off store cards, personal loans and other credit carrying interest rates above 20%.

“If you use R15,000 to wipe out a store card charging you 25% a year, you have given yourself a guaranteed return that almost no investment can match,” says Alexanderson.

“You free up that monthly instalment immediately, and that cash can go towards your household or back into your savings.

Done once, deliberately, that is disciplined money management.”

The warning sign is coming back every year

However, Alexanderson said, the bigger concern was repeat withdrawals.

Of Momentum’s two-pot claims in March 2026, only 5% were a member’s first withdrawal. Another 33% were making a second withdrawal, while 62% were withdrawing for the third time.

Average claim values have also fallen from R12,666 in September 2024 to R9,290, suggesting smaller amounts are being withdrawn more frequently.

Across Sanlam and Old Mutual, roughly 75% to 80% of claimants say they expect to withdraw again every year.

“A once-off withdrawal that clears a 25% store card is sound financial management. A withdrawal every single year to service the same debt is symptom of a bigger debt problem,” says Alexanderson.

“When your savings pot has quietly become your household’s annual bailout, the withdrawal is not the problem you need to solve. The debt underneath it is.”

Three questions before you withdraw to pay debt

Alexanderson recommends every consumer works through three questions before submitting a claim:

1. Will this clear the debt, or just calm it? If the withdrawal settles an account completely and closes it, it is doing real work. If it only brings arrears up to date on a debt you will fall behind on again, it is a temporary reprieve you have paid for with your retirement.
2. Is the interest you save bigger than the tax SARS takes? Two-pot withdrawals are taxed at your marginal rate and added to your annual income. Work out the interest you will actually save over twelve months and compare it to the tax you will pay. If the tax is larger, the withdrawal is costing you money.
3. Is this your first withdrawal, or your third? A first withdrawal is a tool. A third, for the same reason, is a pattern, and a pattern means the household budget, not the savings pot, is what needs attention.

“We are not telling people never to touch this money. It is their money, and for many families it has been a genuine lifeline,” says Alexanderson.

“We are saying use it once, use it deliberately, and have a plan for what happens next. Financial resilience is not built by one good decision. It is built by making sure you never have to make the same emergency decision again.”

About National Debt Advisors: National Debt Advisors is South Africa’s number one debt counselling company and is perfectly positioned to help South African consumers who are struggling with their finances, become debt-free in under 60 months. NDA will negotiate with creditors for reduced monthly interest rates and extended terms – ultimately consolidating all debt repayments into one lower monthly instalment – whilst protecting consumers from harassment by creditors, securing their assets against repossession and leaving them with more money left to live on. NDA will help South Africans gain their financial freedom.

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Author: Omega Ngema from Financial Wealth Holdings on behalf of National Debt Advisors.