By Danie van Zyl, 29 May 2014
This is one of the key findings of the 2014
Sanlam BENCHMARK Survey, a comprehensive annual review of South Africa’s retirement industry. Now in its 34th year, the BENCHMARK Survey polled over 900 retirement fund members, pensioner, trustees and principal officers.
Danie van Zyl, head of guaranteed investments at
Sanlam Employee Benefits, says past assumptions based on life expectancy, family structures and capital requirements at retirement no longer hold true and require fresh insight. “We’ve found that people have less money to live on at retirement but they have longer retirements and far greater financial burdens. It is critical that the retirement industry looks closely at just how different the situation is now, compared with just a few years back, and finds ways to address the changing needs of the retiree.”
The research showed that the normal retirement age for new employees has remained constant at the 63-year age mark. “The total provision for retirement has kept steady for the last four years at around 12%, with a marginal increase of 50 basis points to 12.5% this year. Average contribution rates have remained fairly consistent at 9.6% by employers and 6.4% by employees.”
Stand-out findings from the member survey include:
The key take-outs from the pensioner study include:
“One of the key messages that emerged from this year’s results is the crucial importance of qualified financial advice. There is concerning evidence that even though retirees have an express need to talk to a professional, most spend insufficient time and energy on the all-important exercise of obtaining professional advice,” says Van Zyl.
He says the impact of timeous advice for retirees who may not have sufficient capital to last for their retirement years cannot be underestimated. “The 2014 BENCHMARK Survey has once again demonstrated the tough financial circumstances faced by South African retirees today. The correct decisions taken at and after retirement can greatly influence retirement outcomes. For example, appropriate advice at the point of retirement, and post-retirement, can assist retirees to benefit from a lower initial capital drawdown with smaller annual escalations. The main message is that retirees should not leave the decisions up to others – they should actively seek out appropriate advice to improve the quality of their retirement,” Van Zyl concludes.