How two-pot plugs debts

R21BN WITHDRAWN: FUNDS GO TO EASE COST OF LIVING, PAY LOANS AND ON EDUCATION

- Ina Opperman

The lid has been lifted off the two-pot retirement system, with South Africans clamouring to access their retirement savings since the savings pot withdrawal allowance came into effect on 1 September.

According to the SA Revenue Service (Sars), a total gross lump sum of R21.4 billion has already been paid out under the two-pot system and this figure will undoubtedly increase.

What are South Africans doing with this new source of funds? According to the latest data from Discovery, two out of every 10 claimants said they would use the money to cover education-related expenses.

Arno Jansen van Vuuren, managing director at education insurance provider Futurewise, said these figures highlight the deepening cost of living crisis South Africans have to deal with.

"It is telling that the data revealed a clear connection between income levels and withdrawal rates.

"The figures showed that 38% of low-income earners made withdrawals under the two-pot retirement system, followed by 29% of middle-income earners, 12% of high-income earners and only 4% of very high-income earners," Van Vuuren said.