A leisurely retirement is further out of reach for most South Africans

Published Oct 18, 2022



Martin Hesse

Retirement. What does the word mean to you? For the enviable few who have built up a decent nest egg, retirement represents a life of leisure as compensation for years worked. But that is not the reality for most South Africans.

When 10X Investments published its first South African Retirement Reality Report in 2018, it highlighted how poorly prepared working South Africans were for retirement. Subsequent reports, including the latest, released recently, have shown that the outlook is worsening by most measures. The 2022 report shows that the warnings of the last four years have had little effect on outcomes, noting that “retirement still holds the prospect of deprivation and disempowerment for most South Africans”.

The report is based on findings of the 2022 Brand Atlas Survey. Brand Atlas tracks the lifestyles of 15.4 million economically active South Africans (this year defined as people in households with a monthly income of more than R6 000, aged 16 or older, and with internet access) through online surveys. This economically active segment makes up 30% of the population. The data are weighted to reflect the demographic profile of this segment.

Some highlights

Retirement plan: almost half of respondents (46%) had no retirement plan whatsoever (this has remained relatively constant over four years, as have most other measures). The rest had a plan ranging from “vague” (22%) to “pretty good idea” (23%) to “thought-through” (8%).

Time needed to save: almost a quarter (24%) of respondents believed you could save for a comfortable retirement in under 20 years, indicating that many people mistakenly think it’s okay to start planning for retirement when you’re in your 40s.

Worries about having enough: a majority of respondents (62%) agreed partly or strongly with the statement “I worry about whether I will have enough money to live on after I retire”. A small 8% totally disagreed with the statement, down from 12% in 2020.

Intention to work after retirement age: a large majority (71%) agreed partly or strongly with the statement “I expect I will need to keep earning some money after I retire”.

Reasons for not saving: one statistic that has increased quite dramatically over the last two years is the percentage of people who say they can’t afford to save because they have nothing left over at the end of the month – from 56% in 2020 to 70% this year.

Preservation problem

So, according to the 10X report, there has been zero progress towards better retirement outcomes. Admittedly, the tough economic times must take much of the blame, as shown in the last statistic above. You can’t encourage people to save if they can’t even afford life’s necessities – there’s a quote by Oscar Wilde, which everyone in the financial education business, myself included, should constantly keep in mind: “To recommend thrift to the poor is both grotesque and insulting. It is like advising a man who is starving to eat less.”

But there is one area where improvement is certainly possible: the preservation of existing savings in retirement funds. National Treasury has tried various strategies to prevent people from cashing in their retirement savings when changing jobs, with little success. It now intends imposing a type of forced savings through its proposed “two-pot” system (one third is accessible in emergencies, but the other two thirds can be accessed only on turning 55), as covered previously in Personal Finance.

Tobie van Heerden, chief investment officer at 10X Investments, is of the view that although the two-pot system will go some way in addressing our retirement crisis, it has not been thought through sufficiently.

“Treasury’s original retirement reform proposals aimed to ‘nudge’, rather than force, individuals into making decisions which serve their long-run interests. That hasn’t worked, as our Retirement Reality Report confirms, which is why Treasury is now looking at legislating desired behaviour.

“The 'two-pot' proposal, which would oblige the preservation of most of their savings while allowing individuals to access a portion to provide for short-term relief in an emergency, would be a big step forward to resolving South Africa’s crisis, but would not be a golden bullet. It doesn’t apply to the many thousands who are self-employed or in informal work, from street traders to white-collar workers in the gig economy.

“Unfortunately, it seems that the practical implementation has not been comprehensively thought through. The complexity of the proposed system will impact member administration heavily, which will have a knock-on effect on costs. By simplifying the proposed legislation, a lot of headaches could have been avoided,” Van Heerden says.

He says that even for those who would fall within the two-pot proposal, other changes would be required to really fix the system, including, but not limited to:

  • Ensuring compliance with certain standards in all retirement products offered by asset managers and administrators, particularly around fees, which is such a key factor in determining retirement savings success.
  • Reviewing contribution levels to ensure people are aiming for a goal that would allow them to achieve decent retirement outcomes.


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