Anticipated impact of the Two Pot Retirement System on the markets.

Loading player...
GUEST: Izak Odendaal - Old Mutual Wealth Investment Strategist

It cannot be stressed enough that early withdrawals from retirement funds should be avoided unless absolutely necessary. The biggest friend any investor has is time, since time facilitates compound growth. Early withdrawals from a retirement fund robs that money of the time to grow. Even at a relatively modest growth rate of 4% per year, R30,000 will more than double to R65,733 over 20 years. At a 6% annual growth rate, it will more than triple to R96,214, and at 10%, will grow to R201,825.

Therefore, taking R30,000 out of your retirement savings today does not mean that your future self will be R30,000 poorer. It means in future you will be poorer by R65,000 or R96,000 or R200,000 two decades from now. It gets worse, since early withdrawals will be taxed at your marginal rate, whereas growth inside a retirement fund is tax-free.

Nonetheless, estimates from the government and various financial institutions suggest that somewhere between R50 billion and R100 billion will be withdrawn in the first month or two after the two-pot system takes effect. This will largely be a one-off event, as future withdrawals will be based on one third of new contributions from September onwards and will therefore be spread out over time.
2 Sep 2024 2PM English South Africa Business News · Investing

Other recent episodes

Why Women’s Financial Empowerment Is an Economic Multiplier

Women’s financial empowerment has the potential to drive economic growth, strengthen households and create lasting generational wealth. Kaya Biz speaks to Alexandra Nortier, Joint Head of Wealth Management at Investec Wealth & Investment International, about why Investec is backing the JSE SheInvests 2026 initiative, the barriers keeping women out of…
23 Jul 1PM 7 min

Affordable Diabetes Care Arrives in SA with Novo Nordisk

Novo Nordisk South Africa GM Sara Norcross explains the launch of the country’s only authorised copy of semaglutide, manufactured using the identical API, process and device as the originator — but at a more affordable price. We unpack what an authorised copy is, why SAHPRA registration matters, how the Acino…
23 Jul 1PM 14 min

SARB holds rates steady in July MPC – What It Means for You

Momentum economist Tshiamo Masike unpacks the SARB’s decision to pause, the upside inflation surprise, and the global factors driving the MPC’s decision. We explore how rising oil prices, geopolitical tensions, and weakening consumer confidence shaped the call — and what households, businesses and markets should expect next. A sharp, data‑driven…
23 Jul 1PM 14 min

PIC Board Exodus: Khaya Sithole on SA’s Biggest Asset Manager in Crisis

Six PIC directors have resigned, Treasury has begun steps to remove others, and whistleblower allegations of interference are mounting. Independent analyst Khaya Sithole breaks down the governance crisis unfolding at the Public Investment Corporation, what’s driving the board exodus, and what this means for the R2.5 trillion in assets the…
22 Jul 1PM 14 min

SA July MPC preview: Rates Outlook amid Hot Inflation

With inflation rising to 5.0%, fuel prices surging, and administered costs climbing, the SARB’s Monetary Policy Committee faces a tough call. Sanlam Investments economist Patrick Buthelezi unpacks today’s CPI print, the risks driving inflation, and what to expect from tomorrow’s MPC meeting. Essential listening for anyone watching interest rates and…
22 Jul 1PM 15 min