Solidarity warns: Don’t miss the mark – further access to retirement savings will deepen the crisis

Solidarity has cautioned against proposals that the National Treasury may consider allowing further access to the retirement component in the two-pot system in cases where South Africans are experiencing financial hardship.

According to recent reports, discussions are planned for the second phase of the system, which could allow individuals who have exhausted their savings and have no other income to access their retirement funds.

However, Solidarity believes this would be a dangerous move that undermines the core purpose of retirement provision and could significantly worsen an already vulnerable situation. The trade union has warned from the outset about the risks associated with such a system.

The two-pot system was introduced to create a balance — limited access to emergency funds through the savings component. In contrast, the retirement component remains protected for its intended purpose: financial security in old age.

According to Marius Croucamp, Deputy General Secretary for Strategy at Solidarity, any further relaxation of this principle would jeopardise that balance.

“A pension fund is not an ordinary savings account, but an investment in your future. It is your salary after retirement, when you are no longer able to earn an income.

“When money is withdrawn prematurely, your future financial security is directly compromised, and you create a crisis for yourself later in life,” said Croucamp.

According to the South African Revenue Service (SARS), more than R79 billion has already been withdrawn from savings components since September 2024, with more than 5.6 million applications processed.

Croucamp believes these figures demonstrate not only the extent of financial pressure on households but also how quickly retirement savings can disappear when they are more accessible.

With fuel prices expected to rise sharply and the cost of living continuing to increase, Solidarity nevertheless acknowledges that many South Africans are under severe financial strain.

For this very reason, the union warns that the temptation to make further withdrawals from retirement savings will only grow. Croucamp therefore strongly recommends that individuals consult financial experts before considering such steps.

He further pointed out that regular withdrawals make it almost impossible to adequately provide for retirement, thereby increasing the risk of poverty in old age.

Other industry stakeholders, such as the Association for Savings and Investment South Africa (ASISA), have also warned that access to the retirement component would erode the preservation of funds and ultimately lead to greater financial hardship.

Proposals supported by other trade unions to expand access further may appear well-intentioned, according to Croucamp, but would create a highly dangerous precedent.

“Each additional concession makes the next one easier. Ultimately, retirement savings become an emergency fund — and no longer a guarantee of a dignified retirement,” he said.

Solidarity emphasises that South Africans need genuine economic relief — not policy measures that place their future at risk.

The union is calling on the government to focus instead on:

• • Easing rising fuel prices and living costs
• • Job creation and economic growth
• • Sustainable and targeted support for vulnerable households

According to Croucamp, in a time of economic uncertainty, it is more important than ever for people to manage their retirement savings responsibly and prudently.

“Retirement savings are not a pressure valve for policy failures. They are a lifeline for your old age. If we begin to deplete them now, the consequences will be felt for decades.”