Guy Opperman, the longest serving UK Pensions Minister, and now Senior Adviser at the global pension and technology company Smart Group
South Africa’s debate around retirement reform often focuses on the immediate challenge: how to encourage more people to save. However, retirement systems can represent so much more than the money in pockets during later life. When designed well, they are economic infrastructure – shaping how a country builds capital, supports financial resilience, and funds long-term growth.
South Africa now finds itself at a pivotal moment in this conversation.
The introduction of the Two-Pot retirement system was a significant reform. It balanced short-term needs with long-term security by dividing retirement savings into two pots, one which allows for limited access pre-retirement alongside another which cannot be touched until after retirement. It acknowledged a reality many governments face that people want both long-term security and some flexibility during working life. Yet the surge in withdrawals from savings pots since its introduction also illustrates how fragile retirement savings can be when immediate financial pressures intervene.
Yet focusing only on short-term financial pressures risks kicking a far bigger challenge into the long grass. Millions of employed South Africans still have no retirement coverage at all, and far too few workers are saving enough to support themselves later on in life. In a country with a young and increasingly mobile workforce, this shortfall represents a looming savings timebomb. Addressing this issue early by building broad, consistent participation in pension saving provides the security for future that the workers’ of today need. It can also create the pools of capital that underpin economic stability and growth, supporting the foundations of the economy that today’s workers will eventually retire into.
This challenge is not unique to South Africa. In fact, many economies across the world face the same issue. One of the most effective ways governments have addressed it is through automatic enrolment, a system that removes automates the savings process by making pension participation the default for workers, rather than an active choice they must take themselves.
If saving for retirement depends entirely on individuals making active decisions, participation will always remain limited. To ensure that more people are saving, the most effective reform is to make saving the default.
That principle sat behind the UK’s automatic enrolment programme, introduced in 2012. Instead of asking workers to opt in to pension saving, employees were automatically enrolled through their workplace, with the ability to opt out if they wished. The results were dramatic. More than ten million additional people began saving for retirement, particularly younger workers and those on lower incomes who had previously been excluded from the system.
When I served as Pensions Minister from 2017 to 2022, we continued strengthening this framework, ensuring minimum contribution levels reached 8% of earnings and expanding coverage across the labour market.
The transformation was striking. Workplace pension participation rose from barely half the workforce to nearly universal coverage among eligible employees.
The success of automatic enrolment was never simply about pensions. It fundamentally reshaped the UK’s savings culture.
Large pools of long-term capital began to accumulate, providing stable investment for infrastructure, businesses, and innovation. At the same time, millions of households gained greater financial resilience and confidence about the future.
This is why South Africa’s discussion around auto-enrolment deserves to be viewed through a broader lens. Expanding pension coverage is not just about retirement adequacy. It is about strengthening the foundations of the economy itself. A well-designed system can mobilise domestic savings, deepen capital markets, and support long-term investment across the country. For this to work, however, implementation matters enormously.
First, simplicity must sit at the heart of the system. Automatic enrolment only succeeds when participation is effortless for both workers and employers. Contributions must be seamless, portable between jobs, and easy for savers to track.
Second, the system must reflect how people now interact with financial services. South Africa has a young and digitally connected population, many of whom manage their finances entirely through smartphones. Pension engagement therefore needs to meet savers where they are through secure digital platforms, mobile access, and clear real-time information about their savings.
Adopting a technology-focused approach provides benefits beyond workforce engagement. Digital administration can dramatically reduce costs for employers and providers, particularly for small and medium-sized businesses. Automated systems can ensure contributions are processed accurately while giving regulators stronger oversight and transparency.
Perhaps most importantly, technology can help build trust, one of the most important ingredients in any retirement system. When savers can easily see their account, track contributions, and understand how their money is growing, participation becomes far more durable.
Of course, auto-enrolment is not a silver bullet. Building a sustainable pension system requires strong governance, transparent fees, and ongoing public education around long-term saving.
Experience across multiple countries now shows that behavioural design matters enormously. Default enrolment, gradual contribution increases, and simple digital engagement tools can quietly transform how people approach saving. Over time, what begins as a policy reform becomes a cultural shift. If policymakers combine automatic enrolment with modern digital infrastructure and strong regulatory oversight, the country could build one of the most inclusive and forward-looking retirement systems globally, with the benefits extending well beyond pensions.
South Africa has the chance to turn retirement reform into something much bigger: a system that strengthens both individual financial security and the country’s economic future.
Ed’s note: Auto-enrolment is gaining momentum in the industry’s conversations. Watch this episode of Industry Insights, with Caroline Naylor-Renn (10X) for more learnings from the UK implementation.
ENDS
