Johannesburg - More than a quarter of working South Africans had no formal retirement savings, according to the 2017 Old Mutual Corporate Retirement Monitor released on Tuesday.
Head of Old Mutual Corporate Consultants, Malusi Ndlovu, said 30 percent of South African workers were ill-equipped for retirement, with those earning less than R5 000 the most affected.
“This statistic jumps to 58 percent among people earning less than R5 000 per month. This group is the most vulnerable, as they often do not have any discretionary savings either or own any property that they can sell to finance their post-retirement lifestyle,” Ndlovu said.
He said if the situation continued unabated, more people would be reliant on a state pension upon retirement. Currently, the country is estimated to have 17 million South Africans depending on social grants.
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The Old Mutual survey found that, between 2012 and 2016, the number of working South Africans, who were likely to cash in their retirement savings, should they have the opportunity, increased from 19 percent to 35 percent.
About 70 percent of working South African respondents belonged to a retirement fund (either employer-sponsored or private). When provided with an option to change their investment choice, only 8 percent did so in the last three years.
When it comes to choosing an annuity, 45 percent of members want the fund to recommend an option or to provide a range of pre-selected options.
The survey also found that a significant number of working South Africans supported both their children and their parents from their disposable income.
“About 23 percent of working South Africans are part of the 'sandwich generation' that supports their children as well as their parents.
Approximately 73 percent of surveyed individuals believed that there was no alternative but to get into debt.
Last year the Taxation Laws Amendment Act of 2015 was signed into law. The National Treasury said the new rules were designed to harmonise the tax treatment for pension, provident and retirement annuity funds.
South Africans are notorious for their low levels of savings. The Reserve Bank has previously indicated that the country’s citizens saved just 15.4 percent of the gross domestic product (GDP). This paled in comparison with the Chinese who save more than 50 percent of their GDP.