South Africans are not saving adequately towards their retirement

It’s Savings Month and South Africans are not saving adequately towards their retirement.

 

Further contributing to this dilemma is that the South Africa's Group insurance market has reached a tipping point. For many employers, group risk fees rose by upwards of 50% over the past few years as a result of a deterioration in claims experience across the industry.

 

Increased group risk fees means that on inclusive cost arrangements, this reduces the available portion of the contributions left for retirement investment.

 

The 2019 Sanlam Benchmark survey highlights a combination of contributing factors including: 

 

  • Economic stagnation - over the last 10 years SA has experienced higher unemployment, lower corporate profitability and reduced consumer confidence;

  • A decline in national health - SA is the world’s ‘unhealthiest country’ (Indigo Wellness Index), 6th drunkest, and has the most drunk-driving deaths in the world;

  • Financial stress: 73% of South Africa’s workers have said they’ve experienced financial stress;

  • Policy changes - the amended tax treatment of disability income replacement policies means there's little incentive for individuals to return to work.

The survey reveals worrying trends that threaten the financial resilience of South Africans.

 

Group risk products play a critical role for retirement fund members by covering them for disability, dread disease, income protection and life insurance. These products fill a vital gap in South Africa where retail risk products are not widespread in the middle market and are largely absent at the lower end of the market.

 

 

 

 

ENDS

 

 

 

 

 

 

 

 

 

 

 

 

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