February 2024

Zimbabwe’s Pension Crisis: Legislators Slam Government Amid Soaring Cost of Living

In Zimbabwe, a growing crisis is unfolding as retirees face the harsh reality of inadequate pension payouts in the face of soaring living costs. This pressing issue has drawn sharp criticism from legislators, who argue that the government's response has been insufficient and tardy. At the heart of the controversy is the stark disparity between the monthly pension amount and the actual cost of living, leaving many pensioners struggling to meet basic needs. The Plight of Pensioners Amidst Zimbabwe's economic fluctuations,...

Kenya. Pension returns trail inflation rate for the second year

Pension contributors are staring at a major erosion of their savings after annual returns on investments in 2023 by pension funds shrunk below the rate of inflation. A periodic pension industry survey done by fund administrator Zamara shows that pension schemes made a weighted average return of 1.4 percent in 2023, which was lower than the 1.7 percent return recorded in 2022. At the same time, Kenya’s average inflation stood at 7.7 percent in 2023, meaning that the average saver lost...

Canada. Cost of Living Crunch Impacting Retirement Savings

A new poll commissioned by the Financial Services Regulatory Authority of Ontario (FSRA) found that 81 percent of people are now more concerned about paying for basic necessities like groceries, rent and their mortgage, than saving for retirement. The poll also found 44 percent said the high cost of living is hindering them from starting to save for retirement. Although individuals and families are living in a difficult economic environment, FSRA is urging consumers to prepare for the future and learn...

UK. One in four have stopped paying into their pensions

Almost two in five pension investors have stopped contributions or cut back on payments in the past five years, new research from wealth manager Investec Wealth & Investment has revealed. The nationwide study found a quarter have stopped paying into their pensions altogether, while another 12% have dramatically or slightly reduced monthly contributions. One of the primary reasons given was the cost-of-living crisis, followed by moving jobs or receiving a pay cut. Investec estimates the average amount of lost contributions adds up...

South Africa. 2023 was a somewhat better year for salaries and private pensions

The BankservAfrica Take-home Pay Index (BTPI), which tracks the average nominal take-home pay among approximately 4 million salary earners in South Africa, ended the 2023 year on a slightly better note as salaries and private pensions performed slightly better than in the previous year. “The average nominal take-home pay was 5.6% higher at R15,409 in December 2023 compared to the R14,596 recorded in December 2022,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements. However, the average nominal take-home pay in 2023...

January 2024

The Four Headwinds of Retirement and How to Combat Them

Dipping your toes in the fresh waters of an exotic beach. Enjoying a gorgeous sunset and your favorite drink as you relax on the back patio. Getting lost in a painting because you have all the time in the world to perfect every brushstroke. Spending more time with family and friends. These are the types of things you dream of indulging in when you retire. You don’t picture worrying about how much money you have in the bank or trying...

December 2023

Pensions at a Glance 2023: OECD and G20 Indicators

By OECD The 2023 edition of Pensions at a Glance highlights the pension reforms undertaken by OECD countries over the last two years. It includes a special chapter focusing on pension provisions for hazardous or arduous work. It describes existing rules, characterises recent policy trends and assesses the design and functioning of early-retirement rules for hazardous or arduous jobs given changing working conditions and ageing pressure on pension systems. This edition also updates information on the key features of pension provision in...

Managing inflation expectations may be tougher in aging societies: Expert

Monetary policymakers in aging economies may be perceived to have a comparatively lesser influence on the public’s inflation expectations when compared to those in nations with a different age structure, according to a leading scholar in investor behavior. Speaking at the 2023 Annual Conference on Asia-Pacific Financial Markets (CAFM) held in Seoul on Friday to Saturday, Professor Stefan Nagel from the University of Chicago said that investors adjust their inflation expectations based on experience rather than the language of monetary...

Money Illusion in Retirement Savings with a Minimum Guarantee

By Catherine Donnelly, Gaurav Khemka & William Lim We investigate the impact of money illusion on the investment strategy and retirement outcomes of pre-retirees. Money illusion refers to the tendency of individuals to overlook the effects of inflation and focus on nominal rather than real terms. We solve and compare the optimal investment strategies for a pre-retiree who exhibits money illusion and aims to maximize the expected power utility of wealth at retirement, subject to a minimum guarantee constraint. While...

November 2023

Retirement Planning in a Time of Inflation and High Interest Rates

Retirement planning can be a complex puzzle to solve, with multiple pieces that need to align for a comfortable retirement. In recent times, two significant factors have emerged to challenge this balance: rising interest rates and inflation. In this article, we'll discuss the impact of these economic realities on retirement planning for individuals and the strategies we recommend at Retirement Planners of America. The debt-free retirement goal At Retirement Planners of America, we tell our clients, “When our client retires, so should their debt be retired.”...