South Africans resign to access retirement funds

South Africans have to deal with economic conditions straining their finances.

The two-pot retirement system allows them to divert some of their retirement contributions to weather these financial storms.

This may not be enough as South Africans resort to resignations to get a lump sum.

Now a major financial service provider is offering clients the option to divert retirement contributions to pay off debt.

Will others follow?

Turning Retirement Contributions into Debt Relief

On 1 August 2026, Discovery launched its Debt Reset program.

The program allows Discovery’s Corporate and Employee Benefits clients to redirect their retirement contributions to pay off unsecured debt.

The benefit is intended to provide employees with an alternative to “leaving employment to access savings,” according to Guy Chennells, Chief Commercial Officer at Discovery Corporate and Employee Benefits.

However, it comes with conditions.

For 3 months, clients will need to receive financial coaching and prove that they can maintain debt repayments.

The move comes as South Africans question how they can access more of their income.

Medical aid has taken the greatest hit.

But the retirement system is also feeling the pinch.

According to Sanlam’s 2026 Benchmark report, half of those with retirement funds withdrew the full benefit when resigning in 2025.

In 2024, only 37% withdrew the full benefit when resigning.

Discovery suggests its program is intended to prevent employees from making short-term decisions to cover expenses.

Paying Debt with the Two Pot Retirement System

At the Sanlam Benchmark event last year, former South African Revenue Service (SARS) commissioner Ed Kieswetter announced that South Africans had withdrawn R57 billion in the first year after the two-pot system went live.

R15 billion went to taxes.

Between September 2024 and June 2025, 21% of those who withdrew from the two-pot system used the funds to pay off short-term debt, according to Discovery.

The rising debt burden is pushing South Africans to forego their future financial health and stability.

An Eighty20 report reveals open loans grew by 875 000 in the first quarter of 2026.

Outstanding balances rose by R41 billion in the first quarter, reaching R2.7 trillion.

The report also shows 41% of credit-active consumers were in arrears of 3 or more months.

According to data from Statistics South Africa (Stats SA), civil judgments reached R369 million in May. The data showed judgments had jumped 36% in one month.