Less than a month since the implementation of the two-pot retirement system, the surge in withdrawal applications continues and Sanlam says it is gaining a deeper understanding of some of the most common questions and misconceptions based on client conversations across its call centres, social media, and other channels.
The imperative to address client questions and clarify misconceptions while reminding clients of both the opportunity and the risks in withdrawal scenarios cannot be understated, says Roxanne Tobias, Actuary Head of Marketing and Communications at Sanlam Risk Savings.
The two-pot retirement system presents a significant shift in how South Africans can access their retirement savings. While it offers more flexibility, it's also crucial to guide clients to understand the risks and nuances of this new system so that they can make informed decisions about their retirement funds without compromising their long-term financial security. Below are five common misconceptions identified following the first two weeks since the two-pot retirement system came into effect.
Receiving instant payment
Roxanne notes that many South Africans believed they would receive an immediate payout after applying for a withdrawal, with some expecting automatic payments without needing to apply for a withdrawal. Two-pot withdrawal applications are multi-faceted and cannot be compared with transactional withdrawals from a financial institution like a bank. South African retirement and tax legislation present strict processes that must be followed to ensure compliance when an individual wants to withdraw funds from retirement savings and this, typically, takes more time to process in reality.
