BL Premium reports that Old Mutual’s head of financial education, John Manyike, warned on Thursday that the two-pot retirement fund withdrawal system could result in more people retiring “very poor”.
Manyike shared the financial group’s two-pot trends as part of its midyear economic outlook. “It is certainly a concern ... given what we know, that for the longest time, the number of people who can retire adequately in SA has been staggering at 6%, so with this type of early withdrawals, we expect people will retire very poor,” he indicated. Manyike said that, since the inception of the two-pot system, Old Mutual had seen withdrawals totalling almost R4bn, of which about R2.8bn reached fund members. The average withdrawal was just more than R12,200. “It’s not like people are using the savings pot to buy cars. When you ask them, some of them will tell you that they are withdrawing to pay off their debts. However, when you look at the reports from the banking institutions, I don’t think it will confirm the fact that people are paying off their debts,” Manyike said. Most of those withdrawing are between the ages of 31 and 40, with the highest numbers falling between 36 and 40. Regarding income brackets, the majority of people making withdrawals falls within the R5,000 to R10,000 income range. “So, it’s people who are more vulnerable, people who may be struggling to make ends meet. We’re hoping that indeed, this money is being used for emergencies, as it was intended for,” Manyike added.
- Read the full original of the report in the above regard by Jana Marx at BusinessLive (subscriber access only)
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