Amid delays to state security system changes, SA's pension system moves further down world rankings | Business

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SA's pension system has gone down further on the global rankings. If it were a soccer team, its coach would not be worried about being relegated from the premier league, but rather about getting kicked out of the first division into the second division.

He said that while this was not only an issue in South Africa, the local pension system has many setbacks. There is a lack of preservation as people tend to take their retirement savings in cash when they change jobs. And it's seldom due to a culture of consumerism. Raazia Ganie of the CFA Society South Africa pointed out during the presentation of the report that people usually take that money because they have no other alternative.

Ganie said the two-pot system should also address South Africa's preservation weakness. But to truly increase retirement savings coverage in the country, South Africa needs to have more people employed. She thinks the financial sector can also do more. One of the recommendations that came up in the workshops that the researchers hosted included compelling all investment houses to provide regular projection statements so that all people saving for retirement can see how they are doing against their goals. Some firms already do this.

"We have low-income earners who find it difficult to find cost-efficient, fit-for-purpose solutions in the current framework because the products are really not geared for this part of the market … In addition, product proliferation and complexity are a problem," she said.

 

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