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National Treasury released a media statement on 11 August, noting that government and other stakeholders are exploring a ‘two-bucket’ system to address retirement fund members’ conflicting needs for longer-term financial security and short-term financial relief:

  • First bucket for longer-term financial security

Members must preserve their contributions and the compounded growth invested. They will not have access to this portion of their funds until they retire.

  • Second bucket for short-term financial relief

Members may access the fund value for emergencies even while they are employed and a member of the fund.


Alexander Forbes supports the intent of National Treasury to enable South Africans to save more for their retirement and for shorter periods before retirement. The ‘two-bucket’ system provides a practicable and responsible solution to the real needs faced by members. In this way, the retirement fund industry can unlock the opportunity to play both a meaningful role in contributing to the financial resilience of members through their working lives as well as providing financial security into and through retirement. We take comfort in the reforms National Treasury has already introduced to encourage preservation of retirement savings and are confident that the proposed ‘two-bucket’ system will result in greater asset accumulation for members over the course of their careers.

Currently, contributing members of employer-sponsored retirement funds do not have access to their savings while they are employed, even though they may be experiencing significant financial strain and may not have any short-term savings. Fund members do, however, have access to their full savings when leaving their employer. As a result, most members then withdraw their full fund values to address their short-term financial needs, inadvertently weakening their ability to generate long-term financial well-being. Lack of preservation is the critical driver of poor financial outcomes at retirement. For this reason, we applaud recent innovations introduced by National Treasury such as retirement benefit counselling, which has had a marked impact on improving preservation behaviour at withdrawal.

This development emphasises the need to inclusively engage with members and empower them with information, education and advice to make informed decisions. Alexander Forbes is well positioned to fulfil this need, given our investment in enabling technologies as well our leading-edge member engagement suite.

Much clarification and consultation are needed with National Treasury on how the ‘two-bucket’ system would work, as any change to legislation will only be effected from 2022 at the earliest. Alexander Forbes therefore awaits further detail from National Treasury. Rest assured that we shall apply our research, expertise and insight to ensure that the public interest continues to be maintained in decision-making.

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