The Momentum Group says it received 112 449 two-pot withdrawal applications to a cumulative value of R1.7 billion by 16 September. The group has paid 81% of all withdrawal applications, and this percentage is rising steadily.
Dumo Mbethe, the chief executive of Momentum Corporate, said more than 80% of withdrawal requests have been processed via digital channels.
Momentum said withdrawal requests have provided insights into broader trends across the South African retirement landscape.
One of the key trends observed since the two-pot launch is the age distribution of applicants. Initially, most requests came from the 40-to-49-year age group, which made up almost 40% of applications.
“It is worrying that individuals who are closer to retirement are withdrawing from the savings pot, as they may not have enough time to make up for the shortfall,” Mbethe said.
However, as the days passed, applications from the 30-to-39-year age group increased relative to the other age groups – closely reflecting the demographics of national contributors to retirement.
Income distribution data further sheds light on the state of financial well-being among applicants. By 13 September, close to 60% of applicants indicated that they were from low-income groups, earning too little to pay personal income tax.
Momentum noted that 10% of applications were made by individuals indicating they have a taxable income of R500 000 and more per year.
It said positive development has emerged in the form of increased client engagement with financial advisers.
Momentum’s adviser teams and retirement benefit counsellors played an essential role during the withdrawal process, offering personalised support in reception areas and helping clients to navigate their options. As a result, some individuals who initially sought to withdraw their retirement funds decided not to proceed after receiving the relevant advice and/or using the group’s tax calculators. In fact, some clients took steps to reactivate dormant policies or invest in new retirement annuities, signalling a growing awareness of the importance of long-term financial planning.
These early trends suggest that while the two-pot system has provided some clients with much-needed financial relief in tough financial conditions, it has also prompted deeper conversations about retirement savings and financial security.
“As the two-pot system continues to gain traction, we encourage South Africans to engage with a trusted financial adviser and to consider alternative routes than drawing on their retirement savings, given the significant tax implications and negative impact on future retirement planning,” Mbethe said.
Old Mutual opens WhatsApp withdrawal channel
Old Mutual announced yesterday that its clients can now submit withdrawal applications via the Old Mutual Channel on WhatsApp. This follows a decision by Old Mutual to move the date earlier than 23 September that was previously communicated.
Michelle Acton, Old Mutual’s retirement reform executive, said the phased approach was adopted to help ensure the system could handle the expected 600 000 withdrawal applications.
Phase 1 enabled customers to check their personal details and savings balances via the Old Mutual channel on WhatsApp. It also gave them the time and opportunity to get their tax affairs in order before submitting a withdrawal application.
“It’s critical for all our retirement fund members to check that we have their up-to-date personal details, as any mismatch between the details provided and the details on record with Old Mutual will result in a withdrawal request being declined or delayed,” Acton said. “These measures are in place as a security precaution to prevent fraud and protect customers.”
The extensive publicity around the two-pot system has created a sense of urgency for many. “We would like to remind members that there is no rush to access your savings pot,” Acton said. “There is no deadline. Members can apply for a single withdrawal from their savings pot at any time during every tax year, but the more money you leave in your pot, and the longer you leave it, the more it will grow.”
Acton advised retirement fund members to have all necessary documents ready, including a valid ID number, bank details, annual income and tax number, to ensure smooth processing.
“Members who submit a valid withdrawal application can expect processing times of up to 30 days, depending on volumes and turnaround times from SARS,” she said.
