South African Individual Retirement Savings: An Analysis of the Social Factors
By Gizelle Willows
This study’s primary aim is to determine whether members of a South African tertiary institution’s retirement fund are en route to have sufficient retirement savings. Secondly, the results are analysed between different social factors namely: age, gender, race, education level, marital status, and cost of employment. Survey data and information received directly from the retirement fund were used as inputs in a customised model. This method was unique to this study, that is, it was able to consider broader circumstances other than the member’s retirement savings within the fund only. Among the sample of 753 respondents, one‐third of respondents will have insufficient retirement savings and <10% will have enough. Single, younger and male respondents are most likely to have sufficient retirement savings and this is suggested to be as a result of advantageous annuity rates upon retirement. Black/African respondents were least likely to have sufficient retirement savings. Notwithstanding the racial population divide following apartheid, societal and cultural explanations speak to a culture of increased spending coupled with high financial dependency relationships. Thus, the findings provide rich information which necessitates policies which address leakage from retirement savings, appropriate defaults, and the availability of innovative and affordable savings vehicles.
Source: SSRN
