South Africans actively seek guidance on retirement savings decisions as households remain under financial strain
As South Africa's two-pot retirement system marks its first anniversary, usage of the Paymenow app reveals that South Africans are actively seeking financial guidance to navigate the complex decision between short-term relief and long-term retirement security. The earned wage access (EWA) provider's educational module on Understanding the Two-Pot System has become the most-used resource on the platform, with nearly 90 000 completions since its launch.
The appetite for retirement education comes at a critical time for South African households, which continue to face significant financial pressure despite modest improvements in recent months. The cost of credit in the South African economy remains 31% higher than four years ago, contributing to the country's lethargic economic growth.
The sustained financial strain on households has made the two-pot system's fundamental question particularly relevant: should South Africans access their retirement savings for immediate relief, or preserve these funds for their future financial security? Paymenow's user behaviour suggests that many are taking this decision seriously, with financial education engagement reaching unprecedented levels across the platform.
Beyond retirement planning, the company's savings module has been completed 73 000 times, reflecting broader interest in building financial resilience. This is also reflected in the behaviour of EWA users, with savings now representing half of all transactions on the Paymenow application. Over the past year, thousands of users have actively utilised the platform's savings function, demonstrating that when provided with the right tools and knowledge, South Africans are eager to build financial reserves despite challenging economic conditions.
The two-pot system, which came into effect in September 2024, allocates retirement contributions into two distinct portions: one-third into a savings pot accessible for withdrawals, and two-thirds into a retirement pot that remains locked until retirement.
Early data from the retirement industry indicates that 39% of eligible members have made withdrawals from their savings pots, while 61% have chosen to preserve their funds. The highest withdrawal rates have been observed among younger generations and lower-income earners, with debt repayment, education costs, and daily living expenses cited as primary reasons for accessing funds.
Denise Neethling, Head of Marketing at Paymenow, said, "The engagement with our two-pot educational content demonstrates that South Africans understand the gravity of decisions around their retirement savings. They're not making these choices lightly, but rather seeking comprehensive information to understand the trade-offs involved. This positions financial wellness platforms like Paymenow as essential partners in helping people navigate complex financial decisions during economically challenging times."
The current economic environment has made these educational resources particularly valuable. With household savings rates at negative one percent and national savings at just 15% of GDP compared to a global average of 28%, the need for financial guidance has never been more acute. Yet the enthusiasm demonstrated by Paymenow users suggests that given accessible education and appropriate tools, South Africans are prepared to make the difficult choices necessary to build long-term financial security.
As the two-pot system enters its second year, the system's success in preserving retirement savings will ultimately depend on South Africans having access to the knowledge needed to make informed decisions about their financial futures.