Two-pot withdrawals reveal debt strain. Here's how employers can help

News24

5 hours ago

Employers and HR professionals have typically relied on engagement surveys and exit interviews to gauge employee needs. However, the introduction of South Africa's Two-Pot retirement system offers a new, largely untapped source of insight: fund withdrawal patterns.
According to Old Mutual Corporate's 2025 Two-pot Withdrawal Survey, nearly eight in ten employees who accessed the new 'savings pot' did so either to repay debt or to cover basic living costs. Of those surveyed, 45% used the funds to service loans, while 35% withdrew to cover essentials like groceries, school fees, and housing.
'The spike in early savings access is a window into the everyday struggles of the workforce,' said Blessing Utete, Managing Executive at Old Mutual Corporate Consultants. 'When employees are dipping into long-term savings just to make ends meet, it reflects how precarious their financial situations are.
'Two-Pot withdrawal rates present an opportunity to reassess employee support, recognising workers as individuals balancing financial, emotional, and family responsibilities — not just as salary earners.'
Utete warns the risk isn't just that financially stressed employees will leave in search of better pay — it's that the ones who stay may be too overwhelmed to perform. 'Debt isn't just a personal issue. It's a performance issue,' he said. 'When employees are fighting just to get through the month, they often don't have the energy, focus, or capacity to deliver their best at work.'
The missing conversation in the workplace
Despite widespread financial stress among South African workers, employers are still struggling to provide meaningful support. 'While employee benefits strategies often focus on long-term issues like retirement, many employees are grappling with immediate challenges, limited practical solutions, and inconsistent access to financial guidance,' he says.
This was a key topic in Utete's podcast, Big Business Insights, where he discussed how integrated financial wellbeing is often overlooked in the workplace. 'People are expected to take charge of their financial stability — but when the only support they receive is geared towards distant outcomes, it sends the message that their day-to-day struggles don't matter,' says Utete.
'That kind of disconnect erodes trust. Employees start to feel like leadership is out of touch with their reality — and that's when engagement, loyalty, and performance begin to suffer.'
Even when employers express an interest in financial wellbeing, workplace initiatives often fall short because they're too generic, too technical and clouded by a lack of cultural relevance — making it difficult for employees to act on what they're told.
What a modern benefits strategy looks like
To address these challenges effectively, Utete says employers need to shift from compliance-based benefits to integrated, human-centred strategies that prioritise immediate financial resilience over abstract future promises. 'If we don't account for that in how we design support structures, we're ignoring the reality of modern working life,' he says.
This means that, in addition to offering well-managed retirement and risk benefits, employers should also provide access to relevant, practical financial education and coaching, focused on budgeting, debt literacy, and everyday money management.
Innovative debt assistance interventions, such as Old Mutual Corporate's Right Track solution, that helps employers uncover unlawful garnishee orders, unlawful deductions, and curb debt collector harassment.
Flexible salary solutions, such as Smart Salary, offer early access to earned wages, allowing employees to responsibly manage their finances before payday and reducing reliance on credit or potentially expensive payday loans.
Tools to help employees avoid debt review — which can restrict access to formal credit during the rehabilitation period — and resolve debt challenges without being excluded from the financial system.
Integrated health and mental health support, integrated with financial wellbeing where appropriate to promote positive mindset and decision-making
Creating a supportive and resilient workforce
By focusing on these immediate, practical solutions, employers can begin to address the underlying financial pressures that employees face. This shift goes beyond reactive measures, fostering a more supportive and resilient workforce and ensuring that employees have the tools they need to manage life and thrive both personally and professionally.
While the Two-Pot system was introduced to improve long-term savings behaviour, it's now doing something more immediate: providing a window into workforce stress that traditional HR tools have missed. 'Withdrawal rates from long-term savings are a new kind of business intelligence — a signal that tells you who might be struggling and what kind of support your employees need,' concludes Utete. 'Employers who act on that intelligence — by building better, more relevant employee benefits strategy— are not just helping employees save for the future. They're improving focus, energy, and performance today.'
For more information on how Old Mutual's integrated employee benefits solutions can support your consulting practice, visit www.oldmutual.co.za/employeebenefits.
About Big Business Insights
Big Business Insights is a thought-provoking podcast designed for business leaders, decision-makers, and industry professionals seeking a 360-degree perspective on leadership, employee benefits, and workplace transformation. Hosted by Blessing Utete, Managing Executive at Old Mutual Corporate Consultants, the podcast features expert guests, including Fatima Vawda, founder and CEO of 27Four and Director of the Association of Savings and Investments South Africa, and Mlamuli Mbambo, MD of Money Fundi, a financial education speaker, coach, and author. In the episode mentioned in the article, they discuss the challenges surrounding employee engagement with financial wellness programmes and how employers can address these issues to better support their workforce.