South Africa has now recorded more than one million Two-Pot withdrawal claims since the
system came into effect in September 2024. That is a significant milestone, and one that carries
an important message for every fund member who is considering, or has already made, a
withdrawal from their Savings Component.
We are sharing this not to alarm, but to inform. As the administrator of your retirement savings,
it is our responsibility to ensure that every member has the clearest possible picture of how their
decisions today will affect their financial position tomorrow.
What the numbers are telling us
The data emerging from across the retirement fund industry is consistent. A growing number of
members are not making once-off withdrawals in response to a financial emergency. They are
returning. Repeat withdrawal behaviour is becoming a pattern, with members drawing from
their Savings Component on a regular basis to meet ongoing monthly pressures rather than
exceptional circumstances.
This is understandable. The cost of living in South Africa is real, and household budgets are
under sustained pressure. The Two-Pot system was designed, in part, to provide exactly this
kind of relief. Access to a portion of your savings before retirement is a legitimate option, and it
is yours to exercise. But it comes at a cost that is worth understanding fully before you act.
What a withdrawal actually costs you
Every withdrawal from your Savings Component is subject to tax at your marginal income tax
rate. This means that for many members, a significant portion of what is withdrawn does not
reach your pocket. It goes to SARS. A withdrawal of R20,000, for example, may result in a net
payout considerably lower than that figure once tax is applied.
Beyond the immediate tax impact, there is the longer-term cost of compounding. Money
withdrawn today is money that is no longer growing inside your fund. Over ten or fifteen years,
the difference between leaving funds invested and withdrawing them regularly can be
substantial. Retirement savings are designed to grow over time. Each withdrawal interrupts that
process.
What we are asking you to kindly remember
We are not here to tell you what to do with your own money. That decision belongs to you, and
the Municipal Workers Retirement Fund respects that entirely. What we are here to do is ensure
that when you make that decision, you make it with full information.
Before submitting a withdrawal request, ask yourself the following. Is this a once-off need, or am
I using my Savings Component to supplement my monthly income? Have I calculated the after-
tax amount I will actually receive? Have I considered what this withdrawal means for my
retirement balance in ten years’ time?
Your retirement remains our priority
The Two-Pot system is a tool. Like any tool, its value depends on how it is used. A single,
considered withdrawal in a genuine moment of need is very different from a pattern of regular
drawdowns that quietly erode the savings you have spent your working life building.
Your retirement matters to us. We will always be transparent about what the numbers mean,
and we will always be available to guide you through them.
Municipal Workers Retirement Fund
For queries or to discuss your Two-Pot options, contact us at IMonamane@mwrfund.org.za or call +27 11 727 2800.
