{"id":97448,"date":"2026-04-18T14:25:40","date_gmt":"2026-04-18T14:25:40","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert"},"modified":"2026-04-18T15:14:42","modified_gmt":"2026-04-18T15:14:42","slug":"old-mutual-retirement-alert","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert","title":{"rendered":"Old Mutual Retirement Alert"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>Old Mutual has warned South Africans against early withdrawals from their retirement funds for discretionary spending on holidays, electronics and cars.<\/p>\n

These withdrawals, allowed under the new two-pot retirement system, will significantly impact financial outcomes in retirement.<\/p>\n

Old Mutual Personal Finance\u2019s Sean van Zyl explained that the system was designed for withdrawals to only be used for emergencies.<\/p>\n

The two-port retirement system was designed to improve financial outcomes in retirement by enabling limited early withdrawals to provide relief in the immediate term.<\/p>\n

It was designed to prevent individuals from having to withdraw their entire savings to cope with short-term financial distress, thereby effectively eradicating their funds for retirement.<\/p>\n

However, Van Zyl said that Old Mutual\u2019s data points to a concerning trend where individuals are withdrawing funds for discretionary spending and not emergencies.<\/p>\n

\u201cRather than reserving these funds for genuine emergencies, we are seeing withdrawals being used for discretionary spending such as Black Friday purchases, holidays, upgrading cars and electronics,\u201d Van Zyl said.<\/p>\n

\u201cIn some instances, this is even premeditated, with individuals planning at the start of the year to use their savings pot for such expenses.\u201d<\/p>\n

Many choose to proceed without consulting their financial advisers, giving asset managers little space to help clients understand the severity of the decision they are making.<\/p>\n

Van Zyl explained that a common misconception is that individuals believe they can make up the shortfall later through increased savings when wages are higher or financial conditions improve.<\/p>\n

\u201cIn practice, it rarely happens. Instead, individuals give themselves false hope and effectively gamble with their retirement prospects,\u201d Van Zyl said.<\/p>\n

Withdrawing funds early from your retirement savings can have severe negative effects later on life, with the compounding process being broken and the amount that is compounded being reduced.<\/p>\n

Van Zyl said early withdrawals tend to indicate poor financial health in a broader sense, with emergencies not being paid for through emergency savings and discretionary spending not be budgeted for.<\/p>\n

Tax implications<\/b><\/p>\n

Another factor that is often forgotten is the significant tax implications of early withdrawals, with SARS likely to take a significant chunk of the withdrawal before it reaches your bank account.<\/p>\n

This is coupled with the fees levied by asset managers to process the withdrawal, which further erodes the potential cash received by the individual.<\/p>\n

However, Van Zyl explained that, when it comes to withdrawals, the urgency to access cash outweighs any consideration of the cost.<\/p>\n

\u201cThis approach is particularly dangerous when dealing with retirement savings, where the long-term consequences are significant and often irreversible,\u201d Van Zyl said.<\/p>\n

\u201cThe tax consequences alone should give people pause, but too often we see individuals accessing these funds without fully understanding or even considering the cost.\u201d<\/p>\n

Accessing the savings pot of your retirement savings causes a spike in income and results in additional income tax to be paid, making the withdrawal less attractive.<\/p>\n

If someone sees they have R30,000 R 30 000 in their savings pot and makes a withdrawal, SARS will recover tax up to 45% against the withdrawal.<\/p>\n

SARS also has the ability to recover any unpaid taxes from this withdrawal, potentially making its chunk significantly larger.<\/p>\n

Van Zyl said the savings pot should be treated as a last resort, existing to address genuine needs when under substantial financial pressure.<\/p>\n

To illustrate the real cost of early withdrawals, Old Mutual Personal Finance prepared a scenario over a five-year period, with outcomes measured at retirement \u2013<\/p>\n

Scenario starts on 1 September 2024 with two investors, A and B, each with R250,000 in retirement savings<\/p>\n

Savings pots each seeded with 10%, resulting in R25,000 in savings and R225,000 in the retirement pot<\/p>\n

Each makes a monthly contribution of R2,000 split between pots, with about R667 to savings and R1,333 to retirement, with both pots growing at an annual return of 6.5%, compounded monthly<\/p>\n

A withdraws the full savings pot balance each year from 2025 to 2029, while B makes no withdrawals and remains fully invested<\/p>\n

From 2030 to retirement in 2040, both investors stay invested with no further withdrawals<\/p>\n

At retirement, A<\/b> accumulates about R1,214,000<\/b> while B <\/b>reaches about R1,386,000<\/b><\/p>\n

\u201cThe difference of roughly R170,000 is driven purely by behaviour, despite identical contributions, returns and fees,\u201d van Zyl said.<\/p>\n

\u201cThe numbers make it clear. Even relatively small, repeated withdrawals early on can result in a significant loss at retirement. Once that compounding advantage is lost, it cannot be recovered.\u201d<\/p>\n

For More News And Analysis About South-Africa<\/span> Follow Africa-Press<\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. Old Mutual has warned South Africans against early withdrawals from their retirement funds for discretionary spending on holidays, electronics and cars. These withdrawals, allowed under the new two-pot retirement system, will significantly impact financial outcomes in retirement. Old Mutual Personal Finance\u2019s Sean van Zyl explained that the system was designed for withdrawals […]<\/p>\n","protected":false},"author":84,"featured_media":97447,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,12],"tags":[275],"class_list":["post-97448","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-policy","tag-south-africa-2"],"yoast_head":"\nOld Mutual Retirement Alert - South Africa<\/title>\n<meta name=\"description\" content=\"Old Mutual has warned South Africans against early withdrawals from their retirement funds for discretionary spending on ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Old Mutual Retirement Alert\" \/>\n<meta property=\"og:description\" content=\"Old Mutual has warned South Africans against early withdrawals from their retirement funds for discretionary spending on ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2026-04-18T14:25:40+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-04-18T15:14:42+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2026\/04\/sm_1776512303.272459.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"675\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Old Mutual Retirement Alert\",\"datePublished\":\"2026-04-18T14:25:40+00:00\",\"dateModified\":\"2026-04-18T15:14:42+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert\"},\"wordCount\":736,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2026\/04\/sm_1776512303.272459.jpg\",\"keywords\":[\"South-Africa\"],\"articleSection\":[\"all news\",\"policy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/old-mutual-retirement-alert\",\"name\":\"Old Mutual Retirement Alert - 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