Guiding consumers since 2009

Retirement industry needs reformation

By Staff Writer
South Africans’ low savings rate needs to be addressed through legislative support for compulsory savings and increased education on retirement options. 
 
This was shown in the results of the 2013 Old Mutual Retirement Monitor. The annual survey, which measures pre-retirement perceptions among working South Africans, was based on 1 180 interviews.
 
Craig Aitchison, general manager of customer solutions at Old Mutual Corporate, said a large portion of the population still has no form of retirement savings in place. 
 
The need to reform South Africans’ savings culture
 
Pension Funds Adjudicator, Muvhango Lukhaimane, told iol.co.za that many retirement funds are placing their credibility at risk by not carrying out their most basic functions. 
 
Regarding the monitor participants, Aitchison said only 50% of the respondents listed retirement as a specific savings objective.
 
“Strengthening the savings culture among South Africans has been identified by Treasury as the primary driver of the current retirement reform proposals,” he said.
 
The results also showed that saving for education remains a high priority among respondents.  
 
“Funeral policies continue to enjoy steady support while the incidence of formal retirement products has declined steadily over the past four measures and is at the lowest level to date at 58% of respondents,” he added.
 
South Africans’ saving habits
 
The 2013 Retirement Monitor showed that the total monthly savings differs significantly between members of retirement funds and non-members, with non-members typically saving almost R1 000 less than members.
 
“This is strong evidence of the benefits of a compulsory savings vehicle and a key reason why we applaud this particular proposal by government,” said Aitchison.
 
Low levels of engagement and knowledge
 
The monitor showed that the participants’ levels of engagement with and knowledge of their retirement funds was very low. 
 
“Just fewer than 60% of respondents indicated that they did not know who their trustees are – an increase from 42% of respondents who indicated the same thing in last year’s survey. In spite of this, members still demonstrate high levels of trust in the trustees of their funds,” said Aitchison.
 
Aitchison concluded that the 2013 Old Mutual Retirement Monitor results showed a concerning lack of education in retirement annuities across all income, age and fund membership levels. 
 
“About 33% of respondents had only heard about annuities previously, while 29% have never heard the word ‘annuity’ used in the context of their retirement planning.
 
The research has shown that members often make uninformed decisions upon retirement. This has raised the question of how trustees and other stakeholders can better assist members on retirement – especially when it comes to annuities,” he said.

Recent Articles

Featured Are you entitled to your spouse’s pension after divorce?

Divorce means more than just parting ways with your partner. It may also involve parting ways with your assets. The Divorce Act states that your retirement fund forms part of your assets. This means that it will be considered when dividing up your assets.

Retrenched – what payments are you entitled to?

In the current struggling economic climate, retrenchments are a regular occurrence and not everyone survives the cut. If you find yourself on the receiving end of retrenchment you may have questions about the payments that are due to you.

Do you want to settle your debt?

You may be considering settling your credit account, whether it’s a credit card or various store accounts, now may be as good a time as any. This especially if you have saved, or you received a tax return or salary bonus. 

Can you afford a personal loan?

Taking out new debt is not always a choice. However, if you’re not pressed by a medical emergency or an unforeseen disaster, it’s worthwhile considering whether you can actually afford it. But what does it mean to “be able to afford a personal loan”? What percentage of your income should you not exceed dedicating to it? 

Deals

Builders Black Friday Special

Price: R5000
When: Until 29 November 2019
Where: Online

Café Rousse Monday Special

Price: Available on request
When: Mondays
Where: Nationwide

Skye Bar Mojito Special

Price: R55
When: Until 31 December 2019
Where: Johannesburg