Vickie Lange, Head of Solutions Enhancement at Alexforbes
The proportion of contributing members of Alexforbes-administered retirement funds who are projected to retire with an income of at least 75% of their final pensionable salary rose from 6% in 2021 to 10% in 2025. According to Alexforbes Member Insights 2026, this represents a relative increase of two-thirds in the proportion of members on track to reach this level of retirement outcomes.
Alexforbes Member Insights is the largest study of its kind in South Africa. It covers more than 1.1 million active contributing member records across more than 310 retirement funds and 2 300 employers. The analysis found that members’ average projected retirement income increased from 40% of final pensionable salary in 2021 to 46% in 2025.
Outcomes also improved among members who had retired. The proportion retiring with an income replacement ratio of at least 75% increased from 7.5% in 2021 to 14.1% in 2025. Average retirement income increased by a third, from 30% to 40% of final pensionable salary over the same period.
Vickie Lange, head of Solutions Enhancement at Alexforbes, said, ‘The 6% figure from earlier editions of Member Insights became one of South Africa’s most widely quoted measures of retirement readiness. Our latest analysis shows that it has risen to 10%.’
‘That is a significant improvement and shows that retirement outcomes can change. However, the result must be kept in perspective. Nine out of 10 contributing members are still not on track to replace at least 75% of their final pensionable salary, so there is considerable work to be done.’
The analysis identified four factors that consistently affect retirement income: preserving savings, contributing enough, saving for long enough and managing short-term financial pressure.
Investment growth played a significant role
Investment growth accounted for most of the improvement between 2021 and 2025. For 92% of members, this growth comes from their fund’s default investment strategy because they do not select a portfolio themselves.
The Alexforbes Performer portfolio, which is used as an example in the analysis, returned 21.8% against a benchmark return of 21.9% in 2025. It achieved a five-year annualised return of 15%, compared with its benchmark return of 14.4% and the inflation-plus 5% measure of 10.1% over the same period.
‘When nine out of 10 members do not choose where their retirement savings are invested, the trustees’ choice of default portfolio carries substantial responsibility,’ said Lange.
‘Investment performance directly affects the income that most members will eventually receive in retirement. Consistent performance across different market conditions remains critical.’
Strong market performance alone cannot close the shortfall. Contribution rates, preservation and time for which savings remain invested are also important.
Preserving savings remains an important retirement decision
Based on certain assumptions, a new member who keeps all their retirement savings invested is projected to achieve an income replacement ratio of 76.5% of final pensionable salary. A member who withdraws their savings-pot balance every year is projected to achieve a replacement ratio of 51%.
Average preservation by assets increased from 44% in 2021 to 52% in 2025. Although this is encouraging, more time is needed to determine whether it is a lasting change in member behaviour. The change may be associated with vested pots, default regulations and counselling, or it may coincide with the implementation of the two-pot system.
‘Preserving retirement savings is one of the most consequential financial decisions a member can make. Timely counselling can help members understand the long-term effect before they withdraw their savings,’ said Lange.
Time and contributions continue to shape outcomes
A member who contributes 15% of their salary towards retirement savings for 40 years is projected to achieve an income replacement ratio of 75%. Saving at the same rate for 20 years produces a projected replacement ratio of only 27%. The average contribution rate towards retirement funding is 11.2% of salary, below the 15% target used in the analysis.
Financial pressure continues to influence decisions
Of the 385 000 members who made savings-pot withdrawals in the 2025 tax year, 67% withdrew again during the 2026 tax year.
The analysis also recorded an 18% increase in retrenchments between 2024 and 2025. It found that the average annual pensionable salary was R320 000.
Most withdrawals appear to be linked to immediate financial pressure rather than a lack of awareness of the importance of long-term retirement savings. Improving members’ day-to-day financial position may help protect retirement savings from early withdrawal. The potential benefit of interventions that reduce debt and improve cash flow should not be underestimated.
Savings outside retirement funds can protect retirement outcomes
Members with access to savings outside their retirement funds are better able to manage unexpected expenses without drawing on retirement savings. Building savings for different needs can also help members make progress towards their broader financial goals. For example, 86% of users of the digital adviser on AF Invest, Alexforbes’ personal online investment platform, are on track to achieve their financial goals.
Advice helps members plan
Decisions that shape retirement outcomes are often made during periods of uncertainty and financial pressure. These include whether to preserve savings when changing jobs, change contribution levels, adjust a retirement date or withdraw money to meet an immediate need.
Advice can help people make informed financial decisions, plan for short and long-term goals and remain committed to those goals over time.
‘Advice helps turn good intentions into better financial outcomes. It can help a member understand the trade-offs, consider the long-term consequences and make a decision suited to their circumstances.’
The analysis shows that retirement outcomes are improving, particularly for members who preserve their savings and remain invested for longer. It also quantifies the effect of decisions that can reduce retirement income, including savings-pot withdrawals and starting to save later.
‘The improvement is encouraging, but it cannot be the end point,’ said Lange. ‘Further progress is possible, and we have clearer evidence than ever before about what works. The opportunity now is to help more members make decisions that strengthen their retirement income over time.’
Access Member Insights 2026 here:
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