Government is weighing up a major shift that could allow South Africans limited access to retirement funds previously locked away until old age, but only under tightly controlled conditions.

National Treasury’s deputy director-general for tax and financial sector policy, Chris Axelson, revealed that discussions around possible changes to the system are expected to get underway later this year, following calls to refine the current framework, as per Business Tech.

The proposal centres on the retirement portion of the country’s two-pot system, introduced in September 2024, which currently splits contributions into two sections — one accessible savings pot and another strictly preserved until retirement.

As it stands, individuals can withdraw from the savings pot once a year, with those funds taxed at their marginal rate, while the remaining two-thirds is ring-fenced in a retirement pot that cannot be touched, even in cases of job changes or financial hardship, unless a person leaves the South African tax system entirely.

Axelson indicated that any potential access to this preserved portion would only be considered in cases of severe financial distress, stressing that conditions would be extremely strict.

The possible rethink comes as financial pressure mounts, particularly among older South Africans, with data from consumer analytics group Eighty20 showing a growing number of people aged 65 and over falling behind on loan repayments.

This trend stands in contrast to the broader population, where default rates have been improving since 2023, highlighting a unique and worsening strain among retirees.

Eighty20 director Andrew Fulton warned that the situation is becoming increasingly concerning, noting that defaults among older consumers are rising rather than stabilising, while broader research paints a bleak picture of retirement readiness in the country.

According to findings referenced by Fulton, only a small portion of South Africans — around 10% — believe they will be able to retire comfortably by the age of 60.

At the same time, concerns are growing that loosening access to retirement funds could deepen long-term financial risks, as many individuals are already dipping into their available savings to manage immediate expenses without replenishing those funds.

Rising living costs are adding further strain, with healthcare expenses for retirees increasing at roughly double the rate of inflation, putting additional pressure on already stretched finances.

Early figures from the two-pot system reflect the urgency many are facing, with more than 100,000 withdrawals already made from savings pots in the 2026/27 tax year.

At Alexforbes, Head of Solutions Enhancement Vickie Lange reported a surge in activity at the start of March, with over 140,000 claims submitted in the first week alone and around 84,000 already processed.

The demand was immediate, with the first claim logged just after midnight on 1 March, while digital platforms saw heavy traffic, recording more than 1.3 million logins during the same period — a clear sign of how urgently many South Africans are seeking financial relief.

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