Retirement / General

4-in-a-thousand pension funds do pass muster

Only four in 1000 South African pension funds have enough members to feature on the right side of the financial sector regulators’ latest ‘economies of scale’ charts. An updated study commissioned by National Treasury (NT) and the Financial Sector Conduct Authority (FSCA) suggests that the optimal retirement fund should have 300000 or more members, a feat achieved by only 4 in 1000 funds. “The updated Economies of Scale Report reveals some remarkable insights about the shifting dynamics of the industry, and [proposes] valuable interventions to improve fund member outcomes,” said NT and the FSCA, in a joint media statement on the report findings.

To defer or not to defer – the annuitisation question

There are many options for retirees to consider when choosing an investment or product to provide them with an income in retirement. Life annuities (a guaranteed income for life) are growing in popularity to serve this purpose. Although many agree that a guaranteed life annuity should form part of their post-retirement investment strategy, they may still opt to defer annuitisation.

New SARS approvals on purchasing an annuity at retirement

A culture of retiring comfortably

According to National Treasury, only 6% of the population will have accumulated enough money to retire comfortably, without having to sacrifice their standard of living. This number is incredibly low, and what it implies is that less than a tenth of the population will not have to rely on the state (government) or family/friends for financial support post retirement.