Beyond the “Bonsela”: How South Africans Are Really Using the Two-Pot Retirement System

When the two-pot retirement system launched last September, many South Africans saw it as a welcome “bonsela” ,  a bonus payout in tough times. Headlines warned of a rush to cash out, and for a moment it seemed as if the fears were true. But a year later, the picture looks very different.

According to Discovery’s Guy Chennells, six out of ten fund members resisted dipping into their pots, despite the pressure of rising debt and daily living costs. Speaking at the Institute of Retirement Funds Africa (Irfa) conference in Cape Town this week, Chennells urged South Africans to see beyond the doom-and-gloom headlines:

“The real story is that South Africans are drowning in debt, yet six out of ten still choose to preserve.”

First-Year Lessons: From Rush to Restraint

The first wave of withdrawals was high, as many treated the system like a windfall. But Discovery’s data shows the second round of claims was nearly 70% lower. By then, the “bonsela effect” had worn off.

Interestingly, repeat withdrawals are most common among millennials, 40% higher than Gen X, largely because of heavy family responsibilities. Social media has been quick to react, with younger workers pointing out that their “two-pot cash” is often swallowed by school fees, black tax, and transport costs before they even get to think about savings.

Despite the withdrawals, the long-term outlook is brighter than under the old rules. Even “serial claimants” are projected to retire with four times more savings compared to the old one-pot model. For the industry, that means three times more assets under management in the next four decades.

What People Are Really Withdrawing For

Contrary to the idea of emergency-driven withdrawals, most South Africans used the money for predictable, unavoidable costs. Roughly three-quarters of withdrawals went towards:

• Short-term debt

• Car and home expenses

• Day-to-day living costs

Emergencies, according to Discovery, accounted for only a “microscopic” share of claims.

A Shift in Retirement Culture

Michelle Acton of Old Mutual, who has been deeply involved in rolling out the system, told delegates the big challenge is still ensuring people retire with enough. Only 6% of South Africans currently manage to retire comfortably.

She also observed that the new system has created three clear types of members:

1. The preservers – who won’t touch their pots.

2. The serial claimants – who see it as an annual withdrawal opportunity.

3. The contingency withdrawers – who only dip in when life really hits hard.

Acton argues that education alone won’t change “serial claimant” behaviour – stronger guardrails are needed.

Responsible Withdrawals: A Silver Lining

Not all withdrawals are reckless. Subedra Reddy of NBC Actuarial Services pointed out that some uses of the pot can actually strengthen long-term finances.

• Buying a home: Using withdrawals as a deposit means millions who once couldn’t qualify for housing finance now have a shot at ownership and no rent to pay.

• Paying off debt: Settling high-interest loans early can save fund members far more than what they lose by accessing savings.

Both strategies could leave South Africans more secure at retirement than if they let debt or rent costs eat away at their income.

The two-pot system has forced fund administrators to modernise and digitise, sparking more engagement between members and funds than ever before. And while critics still worry about South Africans cashing out too easily, the first year suggests something different: many are resisting temptation, and even those who don’t are finding ways to use the system responsibly.

At its heart, the two-pot system is not just about money, it’s about building a new culture of financial resilience in a country where debt is a daily burden. And that may prove to be its greatest success.

{Source: Moneyweb}

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com