/ 4 July 2008

South Africans warned over poor savings culture

The majority of South Africans will retire with insufficient resources, the chairperson of the South African Savings Institute (SASI) said in Johannesburg on Friday.

”Many of us will experience a significant reduction in our welfare, to the extent of living close to the poverty line,” Elias Masilela said at the launch of Savings Month 2008.

He said that replacement ratios averaged less than 30% in South Africa compared with to 75% in North African states.

”This is a direct function of a poor savings performance, unsustainable cost structures, early withdrawals and investment performance over time.

”It can be shown that for people to be able to retire comfortably, they may have to save an extra 25% of their income for this purpose.”

He said the psychology of SASI’s campaign was made even more difficult by the ”intangible benefits and the attendant risks of not saving — which only became realised way in the distant future”. — Sapa