About 500,000 employees across the country dipped for the second time into their two-pot retirement system when the second new tax season started this year.
So far about R57bn has been withdrawn by employees from various pension funds since the regime kicked in nationally in September last year. Since then, there have been over 1,2-million applications to withdraw of which 478,000 were repeating when the new tax year kicked in March.
Liberty Holdings said about 50,000 members from the 224,000 membership have withdrawn for the second time from the two-pot savings.
The company said though there was an unprecedented spike of withdrawal post the launch of the system, there was a slight surge in March at the start of the second circle this year. A majority of the withdrawals where made by mid-career members between the ages of 31 to 51 and men account for 54%. About 37% of the payouts went to members in their 40s while 38% was paid to members in their 30s.
The truth is that you are taking from your future self and some of the long term effects is that you are going to end up [with] less retirement benefits.
— John Taylor, head of Liberty's investment and benefit consulting
At least 16% of the claims were declined due to claimed value amount exceeding available balances, insufficient balances or duplicate claims received.
Most of those who applied did so because they were subjected to middle-income economic pressures with the average gross value of the claims paid being R11,500.
John Taylor, head of Liberty's investment and benefit consulting, said though members were not asked for the reasons to withdraw, their data from credit bureaus and Sars showed that the money went to settling debts, paying school fees and put down as deposit for a second-hand car purchase.
Fahiem Esack, Liberty's lead specialist: Operations, Analytics and Insights, said it was important for people to first speak with a financial adviser before making a withdrawal which could impact on their future after retirement.
“The truth is that you are taking from your future self and some of the long term effects is that you are going to end up [with] less retirement benefits. It goes back to being clear what the need [of the money] is.
“The short gain of what you are looking at preceding now, there will be long term pain in the sense that when you get to retirement [you] would get less than what you initially would have, had you not planned. [What] you take today means you forego future income,” said Esack.
SowetanLIVE
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.