The two-container pension system in South Africa is seeing an increase in withdrawals as middle-income households use their savings to repay debts, cover living expenses, and pay for education.
According to new data provided by Momentum Corporate, 52% of participants eligible to withdraw from their pension component have already made such payments. The study found that affluent middle-income households are most prone to repeated withdrawals, while many lower-class individuals cannot access the money because their savings fall below the minimum threshold of R2000.
The data shows that 44% of all withdrawn funds were directed towards debt repayment, 23% towards daily needs, and 20% towards education.
Financial pressure drives withdrawals
Our company, Momentum Corporate, notes that salary increases are not keeping pace with the rise in debt and overall expenses for the established middle class. Nashalin Portrag, Head of FundsAtWork & Distribution at Momentum Corporate, stated that the primary reason for these withdrawals is financial pressure.
Portrag explained that many members of the lower and developing middle classes cannot withdraw money at all because their savings do not reach the minimum amount required by law of R2000. The middle class, on the other hand, usually has enough savings to use as an emergency reserve fund amid the constant rise in the cost of living.
He added that rising interest rates, inflation, and the need to service existing loans have pushed people to use savings within the two-container provision system to maintain financial stability.
According to Momentum Corporate, there is a discrepancy between people's intentions and what actually happens. In 2025, 74% of participants stated they would only use their pension component in case of real necessity. However, by 2026, only 48% of eligible participants had not made a withdrawal, representing a 26% gap between good intentions and financial reality.
Age and life stage are also important. For example, mid-career millennials are most likely to make repeated withdrawals because they have to balance mortgages, debts, and raising children. Meanwhile, Generation X representatives typically withdraw funds once and do not use them again, whereas baby boomers, with greater financial stability and approaching retirement, tend to leave their savings untouched.
The key message for financial advisors, fund managers, and employers is that participants are not intentionally ignoring their future but are taking steps necessary to overcome current difficulties.