Two-pot radio campaign encapsulates the ASISA Foundation’s goal to improve financial literacy

The final instalment of the ASISA Foundation’s four-week Let’s Talk Two-Pot?radio campaign – recently aired on Heart FM – underlined the core message of the campaign: while the new Two-Pot Retirement System offers flexibility, individuals should exercise caution before withdrawing from their retirement funds.

Olwethu Nodada of Heart FM interviewed Ruth Benjamin-Swales, CEO of the ASISA Foundation, alongside financial planning expert Eric Jordaan, director of Crue Invest. They explained the basics of the Two-Pot Retirement System, the potential pitfalls of early withdrawals and the long-term benefits of preserving retirement savings.

Eric explained the rationale behind the system, “The Two-Pot system is there to strike a balance between encouraging people to save for their retirement and providing some access to cash for immediate needs, like where you’ve got debt to settle or have financial emergencies.” He said while there is now an option to withdraw up to R30 000 from your savings pot, doing so could jeopardise long-term financial security.

Ruth reinforced this message, urging caution. “We really want to encourage listeners to think beyond short-term needs and carefully consider whether they should be accessing the money in their savings pot. It’s part of a vehicle intended for long-term savings to take advantage of the significant power of compound growth over time.”

A major talking point was the excitement and confusion surrounding the ability to access funds. According to SARS, over R26 billion had already been withdrawn since 1 Sep-tember by about 1,4 million applicants, raising concerns about whether people were making the best long-term decisions.

“We understand that people are living in dire situations and when you need to solve a desperate situation, then those funds are there for you,” Ruth said. “However, if you’re trying to save towards a goal, whether it’s a holiday or a lifestyle change, there are other tools to do that. Your savings pot should not be just another savings account. We need to understand what our priorities are – our needs versus our wants. The ASISA Foundation really wants to encourage the preservation aspect of retirement fund savings,” she said.

Eric carefully explained why SARS deducts tax from withdrawals at your current income tax rate, which often comes as a shock to many applicants. He said SARS taxes retirement withdrawals because you received tax benefits on contributing to a retirement fund and contributions could increase tax-free in the fund. Upon withdrawal, tax is therefore applied since the money hadn’t been taxed during accumulation. “SARS will also deduct any outstanding money owed to them before they will allow your retirement fund to pay the rest over to you.”

Ruth concluded by reiterating that listeners should only consider withdrawing in “absolute emergencies” and to access those funds only when they retire to ensure long-term financial stability.

Want to know more?

·????? Watch the full interview with Ruth Benjamin-Swales and Eric Jordaan on Heart FM.

·????? Visit the ASISA Foundation’s Facebook page.

·????? Visit this dedicated Two-Pot Retirement System page on the ASISA Foundation’s website for more details and to listen to previous broadcasts.

·????? Watch Heart FM’s TikTok videos on the Two-Pot Retirement System:

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·????? Contact us at [email protected] to collaborate.

Janete Nel Namarsha Singh Koovi Moodley Ivor Nkanyiso Msimang Helena Gavera Sibusiso Sagoda Francois Adriaan Grounded Media John Manyike Association for Savings & Investment South Africa (ASISA) ASISA Academy Marana Brand Smart About Money Laura du Preez, CFP? Busisa Jiya Ingrid Goodspeed Tebello Radebe Killy Bacela CM (SA) Rodger Walters Seipati Nekhondela Ramostshudi Isaac Ramputa Western Cape Government Sanlam The Ikusasa Student Financial Aid Programme Foundation NPC (ISFAP) Ninety One Financial Intermediaries Association of Southern Africa (FIA) Kamva Capital Bureau of Market Research (Pty) Ltd Jenny Gage Chantal Morifi Coco Cachalia Daphney Sibongile Neke Hallid Smith Ruth Benjamin-Swales Alyna Wyatt The Hope Factory Absa Jacolize Meiring Carel Van Aardt Atleha-Edu