News24 Business | Two-pot frenzy: Alexforbes processes withdrawals of R400 million in a week

Supplied/Alexander Forbes

• In the first week of the two-pot system, Alexforbes processed R1.5 billion in two-pot withdrawals. 
• The country’s biggest retirement fund administrator says this far exceeded expectations.
• Meanwhile, Metropolitan has said 11 400 of its clients had completed the eligibility request within three days. 
• For more financial news, go to the News24 Business front page. 

South Africa’s largest retirement fund administrator says the demand for pension-fund withdrawals in the first week of the new two-pot retirement system has been much bigger than expected. 

The new system allows South Africans a once-off withdrawal of 10% of their previous retirement savings (up to R30 000), which will be taxed at their marginal rate. 

SA’s biggest retirement fund administrator, Alexforbes, processed more than 78 000 withdrawal claims in the first week of the new system.

“This is equivalent to the number of claims we were processing over a six-month period before the new legislation,” the company said in a statement.

The withdrawals are worth R1.5 billion, and Alexforbes estimates that at least R270 million of the amount will be paid in taxes.

“The initial number and value of claims have
far exceeded expectations, landing at the upper end of our forecasts.” It expects this level of activity to continue in the coming weeks, and says that at this rate it could boost South Africa’s GDP by between 0.3% and 0.7%, as South African Reserve Bank research recently predicted.

The administrator previously said it expects pension fund members to withdraw R55 billion in the first year of the two-pot’s implementation. 

Alexforbes says the high level of withdrawals shows more need to be done to educate South Africans in making sound financial
decisions.

“Whilst there is no doubt many members who are financially stretched
and need to access their savings pot for relief, there are many who are doing
so simply for short-term consumption or misunderstanding that their option to withdraw
is available on an ongoing basis and there is no need for rushed decisions now.”

News24 previously reported that retirement fund managers had received a rush of queries since the two-pot system was introduced.

In the first two days, 190 000 Old Mutual clients used its dedicated two-pot WhatsApp channel, while Sanlam’s Corporate client call centre processing 5 500 two-pot withdrawal requests in the first two days. 

READ | Two-pot payout surge: Big pension fund managers report massive interest – others not so much

Meanwhile, Metropolitan said more than 11 400 of its clients had accessed its two-pot chatbot function and completed the eligibility request in the first three days.

It also said that SARS tax directives for each claim had averaged 36%, indicating that most claimants had a monthly income of around R40 000.   

“Despite the increasing financial burden on all South Africans, Metropolitan strongly advises the preservation of retirement policies wherever possible and recommends making withdrawals only after consulting with a financial advisor,” it said in a statement this week.