According to Guy Chennells, chief commercial officer for Corporate & Employee Benefits at Discovery, individuals grappling with poor mental health, such as anxiety, depression, and sleep problems, are more likely to dip into their retirement savings than those without these challenges.
The Vicious Cycle of Mental Health and Financial Stress
Speaking at the Institute of Retirement Funds Africa annual conference, Chennells detailed how psychological well-being directly dictates financial decision-making. Discovery’s internal data—utilising insights from its health administration, banking, employee benefits, and Vitality rewards programmes—reveals that people experiencing high emotional stress are four times more likely to make poor financial choices, including missing bill payments and taking out payday loans.
Furthermore, members at high risk for depression are 1.7 times more likely to withdraw from their retirement funds. Financial distress correlates with rates of depression, anxiety, and sleep issues that are two and a half times higher, creating a destructive feedback loop where poor mental health drives poor financial behaviour, which in turn deepens psychological strain.
Did you know? Discovery data shows that financial distress correlates with a 2.5 times higher rate of depression, anxiety, and sleep disturbances among members.
Structural Pressures and the Surge in Online Gambling
Beyond psychological factors, Chennells pointed to pervasive structural elements forcing South Africans to drain their nest eggs, citing the rising cost of living, mounting debt, and a dramatic surge in gambling. Gambling activity has escalated by 226% since 2019, severely eroding the ability of citizens to save.
Online gambling spending in South Africa now mirrors levels seen in Norway—a significantly wealthier nation—placing South African consumer habits among the highest globally.
Two-Pot Retirement System Withdrawal Patterns
South Africa’s two-pot retirement system, launched on September 1, 2024, permits fund members to access one-third of their annual retirement contributions, taxed at their marginal tax rate. This legislative reform was designed to alleviate immediate financial pressures that previously forced workers to resign prematurely just to access their full pensions.
According to Discovery’s tracking, 43% of eligible members withdrew funds in 2025. This figure ticked up to 46% in 2026, though the average amount of money available dropped from 36% to 27%. Data indicates that a small percentage of members are frequent withdrawers who exploit all available opportunities annually, preventing them from building substantial long-term balances.
Conversely, Irfa chair Nancy Andrews praised the structural reform at the conference, calling the ability to access early funds while preserving capital for longevity “one of our most brilliant moves.” Andrews noted that the legislation has preserved significantly more retirement capital than would have occurred under previous rules.
Pro Tip: More than half of Discovery’s retirement fund members (54%) have successfully avoided touching their two-pot savings, allowing them to build proper buffers for genuine emergencies and future retirement.
Demographic Trends in Retirement Fund Access
Discovery’s comprehensive data breakdown highlights distinct demographic trends governing who accesses their retirement savings:
- Age: Younger individuals aged 30 to 40 are 1.8 times more likely to withdraw funds compared to members aged 50 and above.
- Income: Lower-income earners withdraw three times more frequently than those earning R500 000 and above annually, making income the strongest predictor of withdrawal behaviour. High-income earners, when they do withdraw, typically use the funds to settle short-term debt.
- Gender: Women withdraw 1.1 times more often than men.
- Utilization: The primary use of withdrawn funds goes toward car and house expenses at 25%, closely followed by education at 22%.
Improved Communication and Unclaimed Benefits
Raazia Khan, head of benefits at NMG, highlighted an unexpected positive outcome of the two-pot system rollout: vastly improved communication lines between retirement funds and their members. The implementation forced funds to secure updated member contact details, helping to tackle the historical challenge of billions in unclaimed retirement benefits lingering in the system.
By October 2025, cumulative withdrawals from the two-pot system reached R57 billion, with the South African Revenue Service collecting approximately R22 billion in associated taxes.
Frequently Asked Questions
What is the two-pot retirement system in South Africa?
Launched on September 1, 2024, the two-pot system allows retirement fund members to access one-third of their ongoing retirement contributions once a year to address immediate financial needs, while locking away the remaining two-thirds for long-term retirement preservation.
How does mental health affect retirement savings?
According to Discovery data, individuals experiencing high emotional stress, anxiety, or depression are significantly more likely to make poor financial decisions, miss bill payments, and withdraw money from their retirement funds prematurely.
Who is withdrawing the most from their two-pot savings?
Data shows that younger workers aged 30 to 40, lower-income earners, and a small core of repeat withdrawers access their savings more frequently than older members and high-income earners.
What are your thoughts on the impact of mental health and online gambling on retirement savings? Join the conversation by leaving a comment below, explore our related financial news articles, or subscribe to our newsletter for weekly updates.
Related reading