A preservation ‘revival’ will supercharge South Africa’s retirement outcomes
South Africa’s retirement outcomes will improve radically if all retirement funding contributions are kept invested when fund members change jobs. Other quick wins include increasing the minimum government pension; delaying the government retirement age beyond 60 years; and refocusing the industry from saving a lump sum at retirement to providing a sustainable income in retirement.
These observations were made by Dr David Knox, the lead author of the Mercer CFA Institute Global Pension Index (GPI), during a keynote address to the inaugural Allan Gray Retirement Benefits Conference.
“An ideal retirement income system should not be solely focused on the provision of a lump sum at retirement; but rather on providing adequate and sustainable income and benefits throughout retirement,” said Knox, as he unpacked the 2020 GPI report.
The GPI ranks the retirement income systems in 39 countries. Overall rankings are based on three sub-category scores for the adequacy, sustainability and integrity of the system. South Africa, which was 27th out of 39 countries, can learn valuable lessons from top performers like Denmark and the Netherlands.
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