The "two-pot system" refers to a proposed reform in South Africa's retirement savings structure, aimed at improving access to retirement funds while encouraging long-term savings. Under this system, retirement savings would be divided into two separate "pots":
- The First Pot: This portion would consist of funds that are accessible before retirement, typically to cover emergencies or other financial needs. This is intended to give individuals more flexibility and control over their savings, particularly in times of need, without waiting until retirement.
- The Second Pot: This portion would remain locked until retirement, ensuring that the bulk of retirement savings is preserved for long-term financial security. It would encourage people to keep saving for retirement, ensuring that funds grow over time and are available to provide for their future.
The two-pot system aims to balance immediate financial needs with the long-term goal of retirement security, offering greater financial freedom while still safeguarding funds for the future.
https://www.allangray.co.za/understanding-the-two-pot-retirement-system/#1