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By Kanyisa Mkhize, 14 June 2022
On the plus side, 30% had reduced their debt levels following the pandemic.
Off the back of this new reality now faced by South Africans, the survey sought to establish the changing requirements of retirement fund members and assess how the industry has adapted to meet these needs. The 2022 survey polled 83 principal officers of stand-alone funds, 100 participating employers in umbrella funds, 15 asset consultants, 15 healthcare consultants, six top umbrella fund sponsors and 500 online consumers.
Among the key findings were:
Kanyisa Mkhize, Chief Executive Officer of Sanlam Corporate, says the objective of the 2022 survey is to look ahead and establish how the retirement industry can adapt to the vastly changed world. “The retirement industry is in a uniquely strong position to impact the lives of South Africans as it is the largest source of invested assets in the country. We are hoping the findings will start the right conversations in South Africa to ensure our industry can play a massive role in economic recovery and, ultimately, help kickstart growth.”
The Benchmark Survey explored a few key themes which are unpacked below.
Those in the industry do not believe that implementing the two-pot system by March 2023 is realistic, as it involves ‘an enormous amount of work’.
Just over half of members (consumers) who took the poll were aware of the two-pot system but 56% said they did not agree with it, with 29% saying if the law was changed, they would ‘definitely not’ access their retirement funds early and 20% saying they would ‘probably not’. In addition, 62% of respondents said, if they could, they would increase their retirement savings.
“A lot of the responses in the consumer study suggest a more conservative and financially conscious South Africa has emerged from the pandemic,” said Mkhize.
The survey put renewed focus on healthcare and, for the first time, included healthcare consultants in the study.
Among the key take-outs from the consumer poll were:
Key findings from the industry side were:
67% of stand-alone retirement funds and 53% of umbrella funds expressed an interest in investing in alternative asset classes over the next three years. Across both infrastructure and impact investing, there had been a slight increase in asset allocation to those asset classes, however, the study did indicate that there was more education needed from asset managers in this area.
The consumer study showed some progress in terms of effective communication. However, of the members polled who had withdrawn their retirement funds when changing jobs, 63% had received no counselling from their HR team and had been given a withdrawal form to sign without the implications being explained.
Mkhize concludes that, on balance, the findings definitely suggest a change in behaviour from South African retirement fund members. “People seem to be placing more value on the role their employee benefits play in their lives, and we think the industry is responding by introducing more holistic offerings. We hope the focus on benefits counselling and financial education will remain a key focus to help South Africans make the right decisions for their current and future selves.”
For more information on the Sanlam Benchmark, please visit our webpage where the full research will be available for download.