Retirement Funding in South Africa 2019
The South African retirement funding sector, with assets in excess of R4.26-trillion, has the fifth highest assets-to-gross domestic product ratio in the world. However, less than 10% of retirement fund members are able to maintain their standard of living when they stop working and 41% of economically active South Africans have not made any provision for their retirement. Total membership of retirement funds rose from 16.6 million to 16.9 million in 2017, while total retirement fund contributions increased by 5.06% and total benefits paid decreased by 3.47% year-on-year.
On 1 March 2019, amendments to the Pension Funds Act came into effect. These seek to ensure that pensioners have enough money to live on in their retirement by making it mandatory for funds to provide their members with counselling on retirement and to offer pension options that are affordable and appropriate. The reforms require retirement funds to improve fee disclosure and provide cost-effective annuity strategies for their members. A proposal by the ANC to introduce prescribed investments for pension funds has been met with some resistance. Several commentators have warned that pension funds could collapse if the government is allowed to dictate to fund managers how to invest retirement fund assets.
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