Many South Africans have turned to the two-pot retirement system to access cash and ease financial strain. JustMoney’s 2024 Two-Pot System Survey found that 79% of participants considering a two-pot withdrawal planned to use the money to pay off debt.
Similarly, FNB’s 2026 Retirement Insights Survey found that 35% of consumers who had already made withdrawals used the money to settle debt.
When debt consumes a large portion of your take-home pay, a two-pot withdrawal can seem like the quickest route to financial relief. But is it the right solution?
This article examines when accessing your retirement savings may make sense and when debt counselling could offer a more sustainable path out of debt.
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Using retirement savings for debt relief
Tapping into retirement savings to settle debt, catch up on arrears, or reduce monthly repayments has definite appeal – as does making an annual withdrawal to stay on top of your finances.
However, the question is whether a two-pot withdrawal can actually solve your problem, especially if debt repayments remain unaffordable after the money is spent.
If you’re using a two-pot withdrawal to cover a monthly budget shortfall, rather than addressing the causes of your debt, you may find yourself in the same position again within a few months, cautions Sylvia Walker, author of Home Truths About Money: Candid advice for creating personal wealth, and a registered financial adviser with Andrew Prior Consultants.
“Take a step back and look at the bigger picture,” she recommends. “Think about how you manage money and whether you might need to change your money behaviours. What led to your debt, and is this something you can control in future?”
Questions to ask before deciding on a course of action
Before choosing between a two-pot withdrawal and debt counselling, ask yourself three questions:
Is the problem temporary or ongoing? A cash injection can solve a temporary shortfall, but it won't make unaffordable debt repayments affordable.
Do you need cash, or do you need lower repayments? A two-pot withdrawal provides a lump sum, while debt counselling reduces your monthly debt burden.
Are any of your assets in arrears? If you're behind on a home loan or vehicle finance agreement, debt counselling may prove to be the safer choice, as any included assets are protected from repossession.
Is your debt situation temporary or ongoing?
The solution depends on whether you’re experiencing a temporary financial setback or a more persistent problem.
If you have a short-term need for cash, you may be able to negotiate new payment agreements with your creditors, or use a two-pot withdrawal to strategically settle arrears or high-interest debt. This only applies if your debt is still manageable and you can meet your monthly repayments.
However, if your debt repayments have become unaffordable, simply accessing a cash lump sum won’t prevent you from falling into a future debt trap.
If, after your repayments, you can’t cover essential living expenses, such as food, transport and utilities, you may be overindebted. In this situation, a two-pot withdrawal is unlikely to provide more than temporary relief.
Why a two-pot withdrawal should not be taken lightly
Although a two-pot withdrawal may seem like the answer, especially if it can resolve some of your most pressing debt problems, you may be solving one problem today while creating another for retirement.
For one thing, the amount paid into your bank account may be much lower than you expect because withdrawals are taxed and retirement funds charge administration fees, says Brandon-Lee Stevens, a financial adviser at Liberty.
For example, if you earn R120,000 a year and fall into an estimated 18% marginal tax bracket, a R15,000 withdrawal could attract about R2,700 in tax plus an estimated R300 administration fee, leaving you with roughly R12,000 in your bank account. In other words, around R3,000 of the withdrawal could disappear before you receive the money.
The effect becomes more noticeable as your income increases. If you’re earning R250,000 a year, the same withdrawal could leave you with about R10,800 after tax and fees. The South African Revenue Service (SARS) will also deduct any outstanding tax debt from the payout, which could mean even less paid out into your account.
Stevens says any withdrawal can have a significant long-term impact because you lose many years of compounding – which is interest earned on top of the interest on your money. That R15,000, left invested at 9% a year, could grow to around R84,000 over 20 years before inflation, although actual returns will vary. You’re therefore putting R84,000 at risk – not R15,000.
In addition, you can only make one withdrawal from your savings pot per tax year. “That means if you withdraw early in the year and face a genuine emergency later, you may have to rely on credit cards, overdrafts, or personal loans to get through the crisis,” he points out.
Finally, retirement-fund benefits generally enjoy protection from creditors while they remain in a retirement fund. Once money is withdrawn through the two-pot system and paid into your bank account, that protection falls away.
If you are in financial difficulty and creditors are pursuing repayment, this is a factor worth taking into account before making a withdrawal.
When a two-pot withdrawal isn’t enough
If you’re overindebted and already falling behind on your repayments, a two-pot withdrawal may not even make a dent in your debt.
While a withdrawal can provide temporary relief, it does not make unaffordable debt affordable. If your income is no longer enough to cover your debt repayments and essential living expenses, accessing retirement savings may only delay the problem rather than solve it.
In these circumstances, it may be worth exploring debt management solutions specifically designed for overindebted consumers. One of these is debt counselling, also known as debt review, a formal process established under the National Credit Act to help consumers restructure debt into a more affordable repayment plan.
And it works: DebtBusters found that 14 times more of their clients successfully completed debt counselling in the second quarter of 2026 than in the same quarter of 2016, according to their Q2 2026 Debt Index, paying back roughly R570 million to creditors and reclaiming their financial freedom.
However, like any legal financial solution, debt counselling requires a commitment to a structured plan. Exploring how it works and what to expect ensures you make an informed decision that aligns with your goals.
Be aware that, for as long as you’re under debt counselling, there will be a debt-review flag on your credit record until you’ve successfully repaid your debt and obtained a clearance certificate. As a regulated process, debt counselling is designed to support consumers through to the successful completion of their repayment plan.
A two-pot withdrawal vs debt counselling
A two-pot withdrawal and debt counselling are often discussed as alternatives – but they are actually designed for very different situations.
If you’re considering either, be aware of the key differences shown in the table below.
Factor | Two-pot withdrawal | Debt counselling (debt review) |
What problem does it solve? | A short-term need for cash. | Debt that has become unaffordable. |
Who is it designed for? | Retirement-fund members who qualify to withdraw from their savings pot. | Consumers who are overindebted and struggle to make debt repayments. |
What do you get? | A cash lump sum paid into your bank account. | Immediate breathing room: A single, structured monthly repayment tailored to your budget. |
How does it help? | Can be used to settle arrears, reduce high-interest debt, or cover urgent expenses. | Reduces monthly debt repayments, provides legal protection against creditor action, and helps you retain assets that are included in your repayment plan. |
Impact on retirement savings | Reduces your retirement savings and future investment growth. | Protects your future. Your retirement savings remain untouched while you address your debt. |
Tax implications | Withdrawals are taxed according to your marginal tax rate. | No tax is payable because no retirement money is withdrawn. |
Costs | Administration fees will apply and the withdrawal is subject to tax. | A regulated fee structure is built into your monthly repayments. |
Long-term outcome | Provides temporary relief if the underlying problem remains unresolved. | Helps you rebuild financial confidence, regain peace of mind, and stay debt-free. |
Best suited to | Temporary financial pressure where debt remains manageable. | Situations where debt repayments have become unaffordable. |
Access to new credit | No restrictions. | Paused temporarily to protect your cash flow, prevent new debt, and help you focus on your plan to become debt-free. |
Maximum debt it can help with | Limited by the amount available for withdrawal from your retirement savings. | No fixed debt limit. Debt is restructured based on affordability rather than a maximum debt amount. |
Are both options available?
Although a two-pot withdrawal and debt counselling are often presented as alternatives, they are not necessarily mutually exclusive.
Depending on your circumstances, you may be able to use both options by using a withdrawal to settle arrears that owe to a temporary financial setback, and debt counselling to address unaffordable debt.
Which option fits your debt burden?
The examples below illustrate the practical differences between the two options: a two-pot withdrawal is limited by the value of your available retirement savings, whereas debt counselling can assist consumers with significantly larger debt burdens.
Example debt amount | Two-pot withdrawal | Debt counselling |
R8,000 credit card debt | May be suitable if sufficient savings are available in your two-pot savings component | Usually unnecessary if the debt remains affordable |
R50,000 total unsecured debt | May provide partial relief, but is unlikely to settle the full debt unless substantial retirement savings are available | Can restructure repayments into a more affordable monthly instalment |
R250,000 debt across multiple accounts | Unlikely to resolve the problem through a single withdrawal | Specifically designed for situations where debt repayments have become unaffordable |
The key question is not whether you can access money through the two-pot system, but whether additional cash will actually solve your debt problem.
Your options at a glance
A two-pot withdrawal is most appropriate if… | Debt counselling is most appropriate if… |
You need cash to deal with a temporary financial setback | Your debt repayments have become unaffordable |
Your debt repayments are still affordable | You struggle to cover essential expenses after paying your debts |
You want to settle arrears or reduce high-interest debt | You are falling further behind each month |
You expect your finances to return to normal once the immediate pressure has eased | A two-pot withdrawal would provide only temporary relief |
If you’re dealing with a temporary setback, a withdrawal may help you get back on track. However, if your debt has become unaffordable, a longer-term debt management solution may be needed. The sooner you address the underlying problem, the more options you’ll have for regaining control of your finances and rebuilding your financial future.
Find out more about debt consolidation and other debt relief options.