Michelle Acton, Chief Customer Officer at Old Mutual Corporate

The introduction of the Two-Pot system has shifted how employees interact with their retirement savings, creating both challenges and opportunities for businesses. As employees adjust to the new system, business leaders must step up to support their workforce in balancing short-term financial needs with long-term security, says Michelle Acton, Chief Customer Officer at Old Mutual Corporate.

As early trends under the Two-Pot Retirement System begin to emerge, employers must reckon with a difficult reality: current financial wellbeing strategies may need to be rethought to truly support their employees' financial security. While workers are engaging with their retirement savings, they’re doing so under financial pressure — and often without the support they need to make sustainable long-term decisions.

According to Old Mutual Corporate’s 2025 Member Two-Pot Withdrawal Survey, 45% of retirement fund members who accessed their savings did so to service debt. Another 35% used funds to cover everyday expenses such as groceries, school fees, and rent. More than 70% said they would withdraw again — with tax implications, not preservation concerns, acting as the primary deterrent.

We’ve also seen a significant increase in Savings Pot claims at the start of the new tax year, despite only small amounts being available for access. Of the 413,000 Savings Pot claims submitted since the system’s inception, 93,000 — or roughly 23% — were made in the new tax year alone, from 1 March 2025 onwards. This confirms the earlier finding: employees will withdraw again if they can, due to financial stress.

For some, this raises questions about financial literacy. But that perspective risks overlooking another issue. Employees are not irrational — many are simply financially overwhelmed. They’re not failing to plan; they’re struggling to survive.

A Long-Term Win Revealing Short-Term Strain

It’s easy to interpret high withdrawal rates as a failure of the Two-Pot system or a lack of engagement with the reform. However, this overlooks the core intent of the policy. One of its most important features is that members can no longer cash out their full retirement benefit when changing jobs — historically the biggest destroyer of retirement outcomes in South Africa

Old Mutual’s own modelling shows that the system improves long-term outcomes, particularly by closing this critical preservation gap. But it also surfaces a more sobering truth: many South Africans simply do not earn enough to save and preserve simultaneously. No amount of financial education can change that without acknowledging it first.

The Remchannel April 2025 Salary and Wage Survey clearly illustrates this income strain. Despite the inflation rate easing to approximately 3% and average salary increases surpassing this rate at 5.82%, employees continue to experience financial pressures due to rising living costs, particularly for essential goods and services.

For many households, the salary increases provided are insufficient to absorb the escalating living expenses or reduce debt, let alone support long-term savings. People are making tough choices — not careless ones.

Insights from the front lines

The initial rollout of the Two-Pot retirement reform sparked a surge in interest, revealing just how little many employees knew about their retirement benefits. The traction on social media — from TikTok discussions to cheeky brand mentions by the likes of Nando’s — shows that retirement savings are no longer seen as a distant or abstract concern. They’re entering everyday conversations. The big question now is: how do we use this momentum to benefit employees and ensure they make informed, long-term financial decisions?

A key challenge for businesses is that meaningful workplace discussions about retirement planning are still too rare. Despite growing attention on financial wellbeing, the topic remains sidelined in many organisations, often clouded by jargon, distrust, or lack of visibility.

A critical insight from these internal conversations is that while retirement funding was once largely seen as the employer’s responsibility, today’s employees are expected to plan for their futures on their own. This shift can leave many employees feeling ill-equipped and unsure of how to manage their financial future.

Another key observation is that financial education often fails because the information provided can feel disconnected from employees' real-life circumstances. For financial education to be effective, it must resonate with employees on a personal level, considering their individual financial realities, challenges, and needs.

The Role of Employers in Financial Education

As businesses, the opportunity is clear: to support employees in making better financial decisions, particularly in the context of the Two-Pot system. Financial education shouldn't just be about compliance; it should be a continuous, supportive process that helps employees face short-term financial challenges while securing long term financial wellbeing.

Employers are in a unique position to lead this shift, helping employees understand their retirement options in a way that connects with their everyday realities. This can be achieved by providing accessible financial education, tools, and resources that empower individuals to make informed decisions about their financial futures.

Here are a few subtle but impactful ways employers can begin to support their employees’ financial wellbeing:

• Integrate Financial Wellbeing into Employee Wellbeing Strategy: Treat financial wellbeing as a critical part of a broader employee value proposition, recognising that employees have interconnected needs across physical, mental, and financial health.
• Enhance Communication: Ensure that retirement savings information is clear, timely, and relevant to employees' specific financial situations, avoiding generic or overly complex messaging.
• Sustained Financial Education: Financial wellbeing is an ongoing journey. One-off workshops aren’t enough. Regular, accessible education helps employees stay engaged with their long-term financial goals, even in times of immediate financial stress.
• Provide Practical Tools: Offer resources like budgeting tools or financial coaching to help employees manage both their immediate financial needs and their long-term savings goals.
• Create a Culture of Openness: Encourage open conversations about money within the workplace. When leadership shares their own financial experiences and challenges, it sets the tone for employees to engage without fear of stigma.

The Two-Pot system represents a significant shift in how retirement savings are managed, with the potential to improve long-term financial outcomes. However, it also reveals the short-term financial stress many employees face today. As employers, there’s an opportunity to support employees through these challenges by offering ongoing financial education and resources, helping them secure their financial futures while enhancing overall employee engagement and wellbeing.

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