Almost two months and more than R21 billion later, pension fund members are still opting to withdraw funds from the saving pots under the two-pot retirement system, but the South African Reserve Bank (Sarb) warns that it could be forced to suspend or reduce its repo rate cutting cycle if the withdrawals are higher than expected.
According to the Monetary Policy Review of Sarb, consumers will spend more when they have more money, but increased spending will push up inflation which will, in turn, force the Sarb's monetary policy committee to suspend or reduce its repo rate cutting cycle.
The two-pot retirement system is a retirement savings reform that allows employees to withdraw one third of their pension savings without having to resign first, since 1 September.
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