Alexforbes: Two-pot claims volumes now exceed R7bn

Alexforbes, a prominent financial services provider, recently unveiled the results of a comprehensive study on the two-pot retirement system implemented in September last year. The insights, derived from a survey of over 8,200 responses and data analysis covering more than one million members, shed light on key trends and behaviors in retirement savings. Vickie Lange, Head of Best Practice at Alexforbes, joined CNBC Africa to discuss the findings. The data revealed a significant increase in claims volume, surpassing R7 billion by the end of November. By January, the figure had climbed to over 370,000 claims, highlighting the substantial withdrawal of funds from retirement savings. Notably, 76% of these claims originated from members aged between 31 and 51, underscoring the financial burden faced by this demographic. Lange explained that younger individuals, who rely on familial support, were less likely to tap into their retirement savings during financial difficulties. In contrast, older members, with more significant accumulated savings, exhibited lower claim rates. The age distribution of claimants provided valuable insights into the varying financial needs and responsibilities across different life stages. The study also delved into the sectors from which claimants originated, with a focus on industries such as wholesale retail, mining, and manufacturing. While these sectors accounted for a significant portion of claims, the analysis underscored the correlation between claim volumes and sector size. Moreover, the data revealed that the majority of claimants had modest fund credit values and annual incomes, indicating heightened financial strain. A key revelation from the study was the predominant use of savings to address debt and essential living expenses. Approximately 80% of members utilized their withdrawals for these purposes, with half of the claimants using the funds to tackle debt and 30% covering essential living costs. The findings highlighted the pressing financial obligations faced by many individuals, prompting the use of retirement savings as a financial lifeline. Looking ahead, the study explored members' intentions regarding future claims. Surprisingly, 46% of respondents opted not to claim from their retirement funds initially, reflecting a cautious approach to utilizing savings. However, a sizeable percentage expressed intentions to claim in the future, with over 30% of previous claimants and 13% of non-claimants contemplating future withdrawals. The data suggested a significant proportion of members were considering utilizing their retirement savings in the future. In conclusion, the insights provided by Alexforbes' study offer valuable perspectives on retirement savings behaviors and trends. The findings underscore the complex interplay between financial needs, age demographics, and sectoral dynamics in shaping individuals' decisions regarding retirement fund utilization. As the financial landscape continues to evolve, a deeper understanding of these trends is crucial for facilitating informed decision-making and ensuring the long-term financial well-being of retirement fund members.