Two-pot’s red flag for advisers

The two‑pot retirement system was designed to change behaviour. Instead, it’s exposing it. Two years after its implementation date, retirement fund members are still accessing their savings pots – and millennials are leading the charge. What does this reveal about financial planning, and how should advisers respond?

The two-pot system gives South African retirement fund members early access to one-third of their retirement savings while preserving the remaining two-thirds until retirement. At least, that’s how some fund members have framed it. But as Darren Burns, Head of Advice at Graviton, points out, the emphasis should be less on early access and more on the preservation. “It’s very positive that two-thirds are now not accessible,” he says. “In the past we would see people intentionally resigning their jobs to access their full capital, with some ending up with no retirement savings. Now many people will be in a better place when they do retire because of the mandated two-thirds savings.”

Where a person puts that emphasis – on the access or on the savings – is something that financial advisers should keep an eye on, Burns warns. 

Sanlam’s 2026 Benchmark Survey shows that 43% of millennials have already accessed their savings pot at least once. “However, it’s important to note that people are making these withdrawals at all age and income levels,” says Burns. “It’s not isolated to any one group.”

Those withdrawals are predominantly used to cover essential living costs, family responsibilities, and debt servicing. This reveals a vulnerability: not all fund members have sufficient emergency savings, and some are simply not in a position to build them. 

“These two-pot withdrawals reflect the financial pressures that South Africans are under,” says Burns. “In many cases, it’s not because of poor decision-making or a lack of discipline. It’s because of a lack of financial planning. If clients have a financial plan in place, they shouldn’t arrive at the end of the month needing to access retirement capital to make ends meet.”

The message to financial advisers is clear: make sure your clients have a financial plan – and advise them to stick to it. 

“That plan should include some form of short-term emergency saving,” says Burns. “It’s a tough conversation, because in South Africa we generally have a very poor savings culture. Most people don’t have a long-term savings mindset, and that’s where the adviser would need to sit down and discuss how the client can balance their immediate needs with their long-term financial goals.” 

Another important discussion centres on the long-term impacts of early retirement savings withdrawals. “Taking R10 000 out of your retirement savings may not seem like a big deal now, but the effects of compounding interest over time can be significant,” Burns warns. “Not many people appreciate that, and it’s something that financial advisers need to take the time to explain. 

Are two-pot withdrawals on their own a red flag? Not necessarily. “It’s an orange flag when a client deviates from their financial plan,” says Burns. “If there’s a real emergency, there may be a genuine need for the client to access capital in a hurry. The financial adviser should encourage their client to discuss their situation, so that they – both the adviser and the client themselves – can understand why and how they’re deviating from their financial plan. The red flag is when the client deviates from their plan and doesn’t want to discuss the reasons why.”

After all, consulting a financial adviser is a lot like seeing a doctor. If a patient doesn’t provide the information the doctor needs, the doctor can’t make a correct diagnosis or prescribe an appropriate remedy. “It’s the same with financial advice,” says Burns. “The adviser needs to know the full story in order to solve the underlying problems. If you’re an adviser, you’re your client’s financial doctor. You don’t judge; you diagnose, and you offer recommendations.” 

For advisers, the key is not to focus solely on the withdrawal itself, but on what it reveals about a client’s broader financial position and planning. Two years into the two-pot system, those conversations may be one of the most valuable early warning indicators an adviser has.