Get more Mail & Guardian
Subscribe or Login

SA net retirement savings highest since 2002

While the financial crisis is putting pressure on retirement savings, a positive trend in South Africa is that net retirement savings have reached their highest levels in a decade, according to Sanlam Employee Benefits on Wednesday.

The latest survey shows that net savings were at 12.4% in 2002 and then underwent a decline to 2008 before gradually picking up to a current level of 12.6%.

But Daniel van Zyl, head of Guaranteed Products, said this was still too low and needed to be 15%.

Lower growth due to the financial market conditions will result in less disposable income, so saving has to increase, said chief executive of Sanlam Structured Solutions, Dawie de Villiers.

The survey also found that the changes made in the 1990s to shift the risk and responsibility of retirement savings from the employer to the employee, have left many employees worse off.

Of concern is that of the one in five members who switched jobs, 70% cashed in their retirement fund.

Van Zyl says more guidance is needed from industry to ensure members make wiser financial decisions. He says one positive is that the moves to greater consolidation are bringing costs down, and hence improving returns.

But De Villiers cautions that simply switching to cash holdings in a crisis could lead to low net returns and worsen positions. He says it is crucial to ensure there is consistent exposure to growth assets.

David Gluckman, managing director of Sanlam Umbrella Solutions, says that to ensure a salary replacement ratio of 75% real returns of 4% are needed over 35 years.

Van Zyl believes net savings of 15% can happen in the next 10 years, which will result in many more people achieving the requisite 75% replacement ratio. Despite the current improvement, over 90% of South Africans have been found shy of the 75% ratio, according to some independent studies. — I-Net Bridge

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Evan Pickworth
Guest Author

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

‘The children cannot cope any more’: Suicide in Calvinia highlights...

How Covid-19 has intensified the physical and emotional burdens placed on children’s shoulders.

Capitec Bank flies high above Viceroy’s arrow

The bank took a knock after being labelled a loan shark by the short seller, but this has not stymied its growth

More top stories

Council wants Hawks, SIU probe into BAT’s Zimbabwe scandal

The cigarette maker has been accused of giving up to $500 000 in bribes and spying on competitors

How Alpha Condé overthrew Alpha Condé

Since the coup d’état, Guinea’s head of state has been in the custody of the military officers. But it was the president who was the primary architect of his own downfall

‘The Making of Mount Edgecombe’: A view of history from...

Indian indentured labourers’ lives are celebrated in a new book, Sugar Mill Barracks: The Making of Mount Edgecombe

Case of men arrested with 19 rhino horns is postponed

Alleged rhino kingpin and a Mpumalanga businessman appeared in court on charges of the illegal possession and selling of rhino horns

press releases

Loading latest Press Releases…