The Two-Pot retirement system in South Africa: Opportunities, risks, and implications for public revenue
This paper looked into the potential of South Africa’s newly introduced Two-Pot System for retirement savings as a tool for raising public revenue. This complements its main goal of boosting retirement security. While the system aims to alleviate short-term financial pressures on individuals, concer...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Institute of Industry and Academic Research Incorporated
2025-06-01
|
| Series: | International Review of Social Sciences Research |
| Subjects: | |
| Online Access: | https://iiari.org/journal_article/the-two-pot-retirement-system-in-south-africa-opportunities-risks-and-implications-for-public-revenue/ |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | This paper looked into the potential of South Africa’s newly introduced Two-Pot System for retirement savings as a tool for raising public revenue. This complements its main goal of boosting retirement security. While the system aims to alleviate short-term financial pressures on individuals, concerns have emerged about its broader economic implications, particularly regarding public revenue. There are a few prior studies, but none have concentrated on the opportunities, risks, and implications for public revenue. Thus, this paper uniquely contributes to academic research. To gather information for the paper, a qualitative research approach was used, focusing only on secondary data. This method aimed to examine whether increased access to retirement savings might lead to higher taxable withdrawals, thereby contributing to government revenue. This also included exploring the opportunities, risks, and implications associated with the system. The paper found that the Two-Pot System gives opportunities, like the potential increase in tax revenue and household savings. On the other hand, it poses economic risks, such as a decrease in retirement savings, heightened dependence on social grants, and financial mismanagement due to low financial literacy, which could exacerbate poverty and inequality. The paper indicated that this system in the long run poses a risk because it can delay the progress toward achieving national and international goals, including the National Development Plan (NDP) and the Sustainable Development Goal (SDG). The paper recommends regulating and monitoring the system vigilantly to avoid impulsive withdrawals and maintain fiscal stability. |
|---|---|
| ISSN: | 2782-9227 2782-9235 |