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Working South Africans require meaningful connections to make better financial decisions, as they are projected to retire on only 40% of their final salary. Current retirees’ starting pensions amounted to 31% in 2020, an improvement from the previous year’s 28%. This is still a long way off from what is considered ideal.
While annuity solutions have been the primary source of retirement income for South Africans for decades, they tend to receive criticism for not keeping up with the evolving retirement landscape. Yet the local annuity market has undergone considerable change in recent years to address the increased risks faced by retirees and to cater for their individual needs.
Actuarial modelling by the Retirement Matters Committee of the Actuarial Society of South Africa (ASSA) suggests that National Treasury’s “two-bucket” proposal is likely to result in significantly higher monthly retirement income for pensioners by allowing future retirement savings to benefit from the power of compounding.
In order to work out which countries have the highest retirement earnings, the study looked at the percentage of pre-retirement earnings received in retirement. It was found the average amount earned in retirement when compared to pre-retirement around the world is 59.8%.
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