Just 10% of members of retirement funds run by South Africa\u2019s biggest standalone administrator are on track to replace three-quarters of their final pensionable salary when they stop work, highlighting an acute savings shortfall in the continent\u2019s largest economy.<\/p>\n\n\n\n
According to Alexander Forbes\u2019s Member Insights report, that\u2019s an improvement from 6% in 2021. The average so-called projected replacement ratio for contributing members is only 46%, though that\u2019s up from 40% five years ago.<\/p>\n\n\n\n
\u201cNine out of 10 contributing members are still not on track to replace at least 75% of their final pensionable salary, so there is considerable work to be done,\u201d Vickie Lange, head of solutions enhancement, said in an online briefing on Wednesday.<\/p>\n\n\n\n
South Africans have struggled to build adequate savings as years of weak economic growth, high joblessness and rising living costs put pressure on household finances. <\/p>\n\n\n\n
The International Monetary Fund expects the economy to expand just 1.1% this year, below the 3.1% global and 4.5% sub-Saharan averages. More than a third of the workforce \u2014 or about 8.5 million people \u2014 are unemployed.<\/p>\n\n\n\n
Financial strain has also prompted workers to tap retirement funds under a system started in September 2024 that allows for early withdrawals from a portion of their savings. <\/p>\n\n\n\n
The company has paid out about R17 billion under that arrangement since then, Lange said.<\/p>\n\n\n\n
The survey covered more than 1.1 million active contributing member records across more than 310 retirement funds and 2,300 employers. <\/p>\n\n\n\n
It considered the impact of preserving savings, sufficient contributions, saving for long enough and managing short-term financial pressure to determine their impact on retirement income.<\/p>\n\n\n\n
According to the report, people needed to put 15% of their salary toward retirement savings for 40 years to achieve the replacement ratio of 75%. <\/p>\n\n\n\n
In South Africa, the average contribution rate was only 11.2%. Furthermore, while people could retire at 65 years, most were choosing to do so as early as 61.<\/p>\n\n\n\n
\u201cThe expected replacement ratio is 45% with a normal retirement age of 60, and that jumps to 68% if they stay five years longer to the age of 65,\u201d Lange said.<\/p>\n\n\n\n
Data from the Organisation for Economic Co-operation and Development show that the average South African can expect to earn only 17% of their working salary in retirement, compared with 96% in Brazil and 84% in Turkey.<\/p>\n","protected":false},"excerpt":{"rendered":"
Data from one of South Africa’s largest standalone administrators shows that only 10% of retirement fund members can replace three-quarters of their final pensionable salary.<\/p>\n","protected":false},"author":59,"featured_media":858706,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"failed","_sma_x_autopost_error":"Instagram publishing failed: Instagram returned HTTP 400: Media ID is not available","_sma_x_post_id":"2110352183417802767","_sma_facebook_post_id":"191437357620492_2236948560458876","_sma_instagram_post_id":"","_sma_x_attempts":1,"footnotes":""},"categories":[11121],"tags":[6280,2755,6162,26812],"class_list":["post-879822","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-alexander-forbes","tag-brazil","tag-turkey","tag-vickie-lange"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/879822","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=879822"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/879822\/revisions"}],"predecessor-version":[{"id":879830,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/879822\/revisions\/879830"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/858706"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=879822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=879822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=879822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}