South African middle-income earners have made the most two-pot retirement system claims, according to Alexforbes. Picture: Karen Sandison/Independent Newspapers
Middle-income earners (those earning R5,000 to R20,000) make up the largest proportion of claimants from the two-pot retirement system, according to a statement from Alexforbes.
The financial services group said that they have successfully paid out more than 75% of two-pot retirement system claims in the five weeks since the introduction of South Africa’s new retirement system.
Alexforbes said that they have processed more than 263,000 claims, valued at more than R4.8 billion.
Vickie Lange, head of Best Practice at Alexforbes said: “Despite some early challenges, we are pleased to report substantial progress in processing savings pot claims.”
According to Alexforbes, the high number of claims is an indicator that many members are under financial pressure and require short-term cash relief.
More higher-income individuals are claiming than initially expected, while single parents with young families are more likely to claim, and married individuals without children are the less likely to claim.
Members from Limpopo and the Eastern Cape have higher claim rates compared to other regions, while homeowners are less likely to claim than non-homeowners.
Alexforbes said that a large portion of members who are financially distressed have yet to claim which suggests that claim volumes will remain high until the end of the year.
Around 25% of claims were unanticipated as these members were not under financial pressure, however, Alexforbes has attributed this to members misunderstanding the two-pot system or external misinformation that encouraged withdrawals.
“Additionally, some members have queried fluctuations in the value of their savings pots, highlighting the need for more education on how market performance affects these balances,” Lange said.
More than 90% of two-pot claims have been submitted through the AF Connect portal as well as other digital channels.
Alexforbes said that once a claim is submitted, members will receive updates as it progresses and the standard processing time is 20 working days.
“We expect trends to evolve as more members withdraw from their savings pots, and we will continue to share updated insights to help address fund-specific concerns,” Lange said.
Lange is also encouraging members to carefully consider the long-term impact of their claims on their retirement outcomes and to make use of educational resources like a tax calculator for savings pot claims.
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