The National Treasury plans to open discussions later this year on possibly allowing access to the retirement pot of savings in the two pot retirement system in cases of dire financial distress.

Such a move would be of concern to the retirement industry, which wants to retain the preservation of funds for retirement but is strongly supported by Cosatu.

In terms of the design of the system, no withdrawals can be made from the retirement pot, which was intended to provide an income on retirement. Withdrawals can be made only from the savings pot.

The system was introduced to provide relief to heavily indebted workers who were resigning from their jobs to gain access to their retirement benefits. South African Revenue Service (Sars) reports that between September 1 2024, when the system was introduced, and February 28 2026 R79.3bn was approved for withdrawal from the savings pots with a tax liability of R21.4bn. A total of 5.6-million people applied for tax directives for their withdrawals.

National Treasury deputy director-general for tax and financial sector policy Chris Axelson said in a Treasury briefing to parliament’s two finance committees last week that access to the retirement pot was expected to be allowed only under strict financial conditions.

He said in reply to a question by Business Day that “the main issue is that if someone has used up their savings pot but has no employment income or Unemployment Insurance Fund (UIF) payments and they have money in the retirement pot, they should be allowed some access to get by. It is meant to be access only for those who are in severe financial distress”.

But Association for Savings and Investment South Africa (Asisa) senior policy adviser Adri Messerschmidt said, “The view of Asisa members is that access to the retirement fund portion, for example, on retrenchment, will erode preservation and result in even greater financial hardship at retirement for those who dipped into the retirement pot. We will participate in the discussions when they are initiated by the National Treasury.”

Asisa represents most of the country’s asset managers, collective investment scheme management companies, linked investment service providers, multi-managers and life insurance companies.

Cosatu parliamentary liaison officer Matthew Parks hoped the discussions could start soon so the desired changes could take effect in 2027. Cosatu wants workers who lose their jobs to have access to all their savings, including the preservation pot, and has suggested that this be paid in the form of a monthly annuity equal to their former salary once all their UIF entitlements and savings have been exhausted.

The 2025 Budget Review noted that requests were made during the public consultations on the proposed two-pot system to allow access to the retirement pot when an individual was retrenched.

“The restructuring required for this reform is complex and therefore forms part of the second phase of the two-pot reforms. Government is beginning work and discussions on measures that may allow access to the retirement component if an individual has been retrenched and is in financial distress,” the review said.

It added that strict conditions would apply to the access, possibly including proof that the individual had no alternative source of income after a period of time, such as payments from the UIF. Access could be limited to a percentage of income rather than a cash lump sum.

The review stated that the Treasury would engage with stakeholders, including labour and industry, once the research was concluded.

The two-pot retirement system splits retirement fund contributions into a savings pot (one third) and a retirement pot (two thirds) with a vested pot consisting of funds accumulated before the introduction of the system. The vested pot is governed by the pre-existing rules of the fund.

Under the system, one withdrawal can be made per tax year (minimum amount R2,000) up to the full existing balance, the withdrawal being subject to tax at the marginal rate.