Retirement savings under pressure in SA: Alexander Forbes

Alexander Forbes said Monday (9 December) that savings and retirement markets in South Africa remain under pressure, with fewer clients preserving their retirement savings once they resign from a company, or enter retirement.

The financial services company reported its financial results for the six months ended September 2019, showing that the preservation rate for retirement savings declining from 55% to 53% during the period.

It also noted that members under administration declined from 944,000 to 927,000 during the period under review.

Chief executive officer, Dawie de Villiers said that the financial results, which included a 42% rise in headline earnings per share, “clearly shows early signs that our strategic initiatives are starting to bear fruit”.

“Whilst our clients are experiencing the benefits of our client-centric and advice-led consulting approach, the top-line benefits will take some time to fully materialise. Our continued engagement of our clients and our employees has resulted in good client retention and some notable new client wins against a worsening macro-economic environment,” the chief executive said.

Alexander Forbes said that operating income from continuing operations was up 1% to R1.588 billion, while profit from continuing operations was up 3% to R403 million.

Headline earnings per share, for the total group, up 42% to 24.5 cents, while an interim dividend of 18 cents per share was declared.

Assets under administration (AuA) and Assets under management (AuM) of R344 billion, down 7% year on year, however, largely owing to client losses during the second half of the previous financial year. The group pointed to good progress in the current period, with AuA and AuM up R2 billion from 31 March 2019.

Alexander Forbes said that strategic initiatives are on track. “We are advanced in our journey to provide an integrated service model to our clients, leveraging our expertise in retirements benefits, investments, healthcare and individual financial planning – thereby retaining and stabilising our client base.”

It said that its new operating model is on track for full implementation. “Our capital light strategy is well under way with the disposal of the South African short-term insurance business expected to conclude early in 2020,” it said.

Alexander Forbes said good progress has been made in the roll-out and delivery of default retirement solutions, showing measurable benefits to clients.

Read: Alexander Forbes earnings slide on savings and retirement market pressure

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Retirement savings under pressure in SA: Alexander Forbes