On 17 November 2021 the Financial Sector Conduct Authority (FSCA) and National Treasury (NT) published an updated economies of scale report on the retirement fund industry of South Africa. The report is an update of an initial study done in 2011 and analysed data sets up to 2018 to understand the relationship between size of funds and fund administration charges. The report aimed to investigate the relationship between scale and administration charges in the retirement fund industry. In summary, the findings suggest that the efficiency of administration charges in the industry has improved to some extent between 2006 and 2018.
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Causes of gender pension gap mixed, with all systems carrying weaknesses Mercer CFA Institute Global Pension Index sees new entrant Iceland top the list Index compares 43 retirement income systems, covering two-thirds of world’s population Iceland’s retirement income system has been named the world’s best in its debut in the 13th annual Mercer CFA Institute Global Pension Index (MCGPI). The Netherlands and Denmark have taken second and third places respectively in the rankings, after a decade of competing for the top spot. The study also reveals that there is much that pension systems can do to reduce the gender pension
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Working South Africans require meaningful connections to make better financial decisions, as they are projected to retire on only 40% of their final salary. Current retirees’ starting pensions amounted to 31% in 2020, an improvement from the previous year’s 28%. This is still a long way off from what is considered ideal. They need better connections to their retirement funds, to their options at key stages in their careers and to the long-term impact of their decisions to change their retirement picture for the better. In addition, planned reforms by National Treasury to introduce the “two-bucket system” will help improve
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By Dolana Conco – Regional Executive – Alexander Forbes Retirement Consulting New tax rules on the annuitisation of provident funds and lump-sum payouts made at retirement took effect on 1 March 2021. Fund members should be aware of additional implications for approved lump-sum disability benefits. On retirement, members of these funds who were under age 55 on this date (known as T-day) may still take amounts which accrued prior to 1 March 2021, plus the fund return, in cash. Members over age 55 on T-day will have access to all amounts in the fund in cash when retiring from that
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Mercer’s Asset Allocation Insights 2021 report released today showed that most investors stayed the course with their asset allocation, even amid heightened volatility and uncertainty over the last year. For international investors, foreign equities now represent 51% of aggregate equity allocations, the first survey in which exposure outside of investors’ home markets tipped over the midpoint. The report also shows growing interest in sustainable investing across the regions, in some cases accelerated by the COVID-19 pandemic, as stakeholders sought to address both economic recovery and sustainability objectives. Janina Slawski, Head of Investments Consulting at Alexander Forbes, Mercer’s strategic partner in
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On 31 August the Minister of Social Development issued a notice to withdraw the Green Paper on Comprehensive Social Security and Retirement Reform (2021). We welcome this decision taken by government. We believe that the proposed National Social Security Fund is not the solution to address the range of social security challenges facing South Africa. The proposal had many flaws and largely ignored material reforms that were implemented in the retirement funding industry over the last decade. These reforms were aimed at: improving governance and financial inclusion reducing costs delivering better outcomes for members   Leveraging existing retirement arrangements  
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By Shelley van der Westhuizen, head of financial well-being strategy & applied research at Alexander Forbes People often need support to make the most of their money to live better and retire better. The right support at the right time means that better choices are possible because they’re based on a good understanding of options. Choices that relate to big financial decisions often are best made with expert help from a qualified financial adviser. But there are things that each of us can do for ourselves to make the most of our money. Making the most of your money involves
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By: Khanyisa Phika – Alexander Forbes Economist More than 26 years later, women are still underrepresented in the South African economy Every Women’s Day commemoration brings us an opportunity to track progress on the declaration made in 1994 by the country’s first democratic government to prioritise gender equality as reflected in the South African Constitution. For centuries women around the world have been marginalised by repressive cultural norms and excluded from fully participating in the economy and in decision-making roles to the detriment of society. Equality, equity, and parity – what’s the difference? Equality is the desired end state of
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The Department of Social Development has released a green paper on comprehensive social security and retirement reform for 2021. We note that it is largely similar to previous proposals dating back to 2012. In brief, the proposal is to create a centralised National Social Security Fund managed by government. This fund intends to provide basic benefits for all qualifying citizens up to a threshold, including all employees from within the private sector. In addition, citizens can choose to top up their retirement benefits using an occupational or individual arrangement. In practice, this means that most existing members will become dependent
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National Treasury released a media statement on 11 August, noting that government and other stakeholders are exploring a ‘two-bucket’ system to address retirement fund members’ conflicting needs for longer-term financial security and short-term financial relief: First bucket for longer-term financial security Members must preserve their contributions and the compounded growth invested. They will not have access to this portion of their funds until they retire. Second bucket for short-term financial relief Members may access the fund value for emergencies even while they are employed and a member of the fund.   Alexander Forbes supports the intent of National Treasury to
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