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Old Mutual says most of its low-income clients plan one-off pension withdrawals under two-pot system

Retirement reform executive Michelle Acton said the company had conducted "some very high-level testing" on its retirement member base, with responses highly dependent on both their current income, as well as proximity to retirement. "With the initial testing that we've done, over 70% of members in the lower (living standard measures) say they will come forward and claim," said Acton.

She indicated that those closer to retirement were highly unlikely to look to access their money immediately, while high-income earners were also not keen due to the higher marginal tax rates they would pay. At the same time, the insurer said there was much confusion from members who believed they would be getting much more than the R25,000 cap set by National Treasury.

"We are getting a lot of [cases] where someone has got a lot of money in their retirement fund, and they think that they will be able to access a full third of it," said Acton. She indicated that there was still more education to be done on how the two-pot system would work and the costs members would incur. When they withdraw 10%, for example, it will attract a withdrawal fee. Administrators are still calculating the additional resources they will need to deal with all the potential claims in one go. They will likely know and communicate the details with their members closer to the implementation date.

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Source: SA Labour News