Nearly all Alexforbes retirement fund members who withdrew money from their savings components are aware this will have an impact on their retirement income, yet 63% intend to withdraw again.
The JSE-listed financial services group said today that 350 000 members, or about 32% of its membership base, have submitted savings component claims since 1 September. The value of these claims is about R6.5 billion before tax, and the average claim is about R19 000 before tax.
Alexforbes has paid 340 000 claims, with an after-tax value of about R4.6bn.
The volume of claims processed in the two months following the implementation of the two-pot system was more than the normal claims processed in two years. It said 99% of claims have been paid within the service level arrangements of 20 business days.
Alexforbes conducted a survey among 8 224 members. Of these members:
- 86% are happy with their decision to withdraw.
- 96% were aware that their long -term retirement outcome would be impacted.
- 96% were aware that they would pay taxes on their withdrawal.
- 50% used their emergency savings component claim to offset debt.
- 30% used their claim to pay for essential living expenses.
- 13% used the claim to make major household purchases.
- 47% of members plan to claim from their savings pots.
- 63% of those who have already claimed plan to claim again.
Alexforbes said it expects consumer spending resulting from two-pot withdrawals to have a marginal impact on GDP growth, ranging from 0.1% to 0.3% in 2024 and from 0.2% to 0.7% in 2025.
The company expects that the inflationary impact of such spending will be negligible, but the impact on the fiscus will be more meaningful. Better tax receipts could improve the debt-to-GDP ratio by 0.5% to 1.1% of GDP in the 2024/25 tax year and by 0.8% to 2.3% in 2025/26 tax year.
“The two-pot system has been the single biggest item of reform in the history of South Africa’s retirement ecosystem. It presents the opportunity to engage, educate, and help retirement fund members throughout their respective retirement journeys and not just at exit, as is the case with retirement benefits counselling,” Alexforbes said in its interim results for the six months to the end of September.
