Retirement systems must be designed for real lives, not ideal ones
For many South Africans, retirement is no longer the neat final chapter of one uninterrupted working life. It is shaped much earlier, as people move between jobs, take on family responsibilities and make difficult decisions when income does not stretch far enough.
The country’s retirement challenge is therefore not simply that people may outlive their savings. South Africa faces that risk too. The sharper risk is that too many people may reach later life without enough savings to generate meaningful income at all, because the savings journey has been interrupted too often along the way.
“The next phase of South Africa’s retirement conversation has to start with the lives people actually live,” says Michelle Acton, Chief Customer Officer at Old Mutual Corporate. “The issue is not only whether people preserve at one point in time. It is whether the system helps them keep building and protecting their savings through the changes that happen across a lifetime.”
Old Mutual Corporate’s 2025 retirement outcomes research data points to a simple but important conclusion. Retirement outcomes are shaped along the journey, not only at the point of retirement. Contribution levels, preservation, consolidation and the choices people are guided to make at critical moments all affect whether savings can one day create income security.
Better design at the moments that matter
Two-Pot has shown this principle in action. By changing the design around one of the most critical moments in a member’s retirement journey, the point at which they change jobs, the reform protects the retirement pot from full cash-out. It still recognises that life happens, while addressing one of the most damaging leakage points in the retirement system.
This change is already showing up in the data. Because the retirement pot is now protected from full cash-out when members leave employment, Old Mutual Corporate has seen preservation improve by 33%.
“The Two-Pot Retirement Reform is not the destination. It is the proof point,” says Acton. “It shows that better outcomes are possible when retirement systems are designed for the trade-offs people actually face, protecting long-term savings without pretending short-term pressure does not exist.”
For Acton, that same design logic must now be applied to the moments when members consider withdrawing. The answer is not to remove flexibility, but to make it better supported.
Clear tax prompts, personalised retirement-impact illustrations and simple digital guidance can then help members make more informed choices when short-term pressure is loudest. “Members should still be able to access support when there is genuine pressure,” she says. “But they also need clearer guidance on the long-term trade-offs. More importantly, we need to help them find the right financial solution for the right financial need, so retirement savings do not become the first place they turn for every shock.”
Retirement savings must keep pace with changing work
As working lives become less linear, retirement outcomes are increasingly shaped by what happens between jobs, between funds and during periods of income pressure.
Remchannel, specialists in remuneration intelligence and reward design, shows in its April 2026 Salary and Wage Movements Survey that employment exits are heavily concentrated among shorter-serving employees. Among permanent employees whose service length was known, 86% of terminations occurred before 10 years of service. The largest share, 50.1%, occurred between one and under five years.
Old Mutual Corporate’s 2025 retirement outcomes research shows the same pattern inside employer funds. Most members have less than 10 years of service in their current fund, with many concentrated in the 0 to 3 year range.
That creates a problem for members. A system built around one long job and one long fund journey can leave people with small balances across multiple funds, contribution gaps and less time for savings to compound.
“Retirement provision still assumes too much continuity,” says Acton. “It assumes income and contributions will keep flowing steadily for decades. But many working lives now change direction more often. When the system does not make it easy to preserve and consolidate through those changes, members can lose the very thing retirement saving needs most, which is time in the market.”
This is where the next phase of reform must become more practical. One of the lessons discussed at the 2025 Old Mutual Corporate Thought Leadership Forum was that stronger retirement systems reduce friction as people move through work. Savings should be easier to transfer, combine and preserve, so that a changing career does not automatically become an interrupted retirement journey.
The design challenge is therefore to keep people connected to long-term saving as their work changes. Without simple preservation, portability and consolidation pathways, money meant to compound can remain scattered or lose momentum before it has had enough time to grow.
But keeping existing savings connected is not enough. The next question is whether enough money keeps going in.
Keeping money invested is only part of the answer
The pressure on adequacy is visible in household income patterns. The 2025 Old Mutual Savings & Investment Monitor shows that 57% of working individuals have more than one source of income, rising to 75% among 18 to 29-year-olds. Multiple income streams may help households cope, but they do not automatically build retirement wealth. For many people, extra income is not surplus money. It is what helps cover today’s costs.
“The retirement system still relies heavily on regular contributions from formal payroll,” says Acton. “But if more people are earning in different ways, we have to think harder about how long-term saving can remain part of those income flows. Otherwise, the system may preserve more of what people have already saved without helping them build enough for the future.”
A retirement system designed for real lives must therefore do more than protect money already saved. It must make it easier for people to keep contributing, even when work, income and household pressure do not follow a neat line.
The Forum pointed to several practical levers that can help move the system from preservation to adequacy. Auto-enrolment can help bring more working South Africans into the savings system earlier, especially where inertia prevents action. Stronger contribution defaults can help ensure that participation translates into more meaningful savings.
“Too often, we put the responsibility on the member at the hardest possible moment,” says Acton. “We ask people to make a long-term decision when managing pressure at home or when worried about immediate income. Better design means reducing the friction in those moments, so the system helps people stay on track instead of expecting ordinary people to make perfect decisions under pressure.”
That means the next step is not only to tell people to preserve. It is to build support around the working lives people actually have.
Financial resilience protects retirement outcomes
Better retirement design can go a long way. It can improve preservation, reduce leakage and make it easier for members to stay invested. But the pressures that interrupt saving often sit outside the retirement fund itself, in household debt, health shocks, income gaps, family responsibilities and everyday affordability.
“We have to widen the conversation,” says Prabashini Moodley, CEO of Old Mutual Life & Savings. “A retirement fund is one part of the answer, but it cannot carry the full responsibility for financial resilience. If we want better long-term outcomes, people need a stronger financial ecosystem around them, one that helps households manage income, risk and pressure more effectively so they have a better chance of continuing to save for the future.”
In practice, this means retirement savings should not be forced to do the work of every other part of the financial system. Medical emergencies, debt spirals, income shocks and funeral costs each require different forms of support. The role of a stronger financial ecosystem is to help members find the right solution for the right need, before the savings pot becomes the default answer to every crisis.
For Moodley, this is a sector and policy responsibility, not only an employer or member issue.
“The next step is to think about financial resilience as a system, not a set of separate solutions,” she says. “Protection, advice, appropriate solutions and public policy all shape whether households can stay financially steady enough to keep building for the long term. When those parts work in isolation, the pressure eventually shows up somewhere else, often in weaker contributions, interrupted saving or poorer retirement outcomes.”
The Forum was clear that retirement outcomes cannot be separated from the wider systems people live in. Responsible capital, stronger institutions, workplace support and social resilience all affect whether people can keep saving long enough for retirement reform to work.
Better design must now move earlier in the savings journey
Moodley says improving retirement outcomes will require coordinated effort across the system. “Better retirement outcomes will not come from one stakeholder acting alone,” she says. “They depend on decisions made by employers, industry, policy-makers, labour and individuals. The role of institutions is to work together, using research, data and insight, to build systems that improve outcomes at scale.”
That broader system view brings the argument back to the practical design of retirement saving. If work is changing, income is less predictable and financial pressure is real, retirement structures cannot rely on members making perfect decisions at difficult moments.
For Acton, the next step is to apply the lesson of recent reform earlier and more consistently across the savings journey. South Africa’s retirement system must be built for the conditions people actually face: changing work patterns, uneven income, household obligations and financial shocks.
“The point is not to design a system that ignores change or uncertainty,” says Acton. “It is to design one that recognises pressure while still protecting the future.”
Recent reform has shown that better design can help savings survive some of that reality. The next policy focus should build on the preservation gains already being achieved through two-pot by strengthening the structures, defaults and guidance that keep more retirement savings invested for longer.
That means moving from intention to architecture: auto-enrolment where appropriate, stronger contribution defaults, phased contribution increases, easier portability and consolidation, better digital infrastructure, clearer withdrawal guidance and a broader financial resilience ecosystem around members.
Living longer still matters. But the greater risk is that too many people reach later life with savings that have been interrupted too often, contributed to too inconsistently, or not given enough time to grow.
“Because the real test of retirement reform is not whether people can access money today,” concludes Acton. “It is whether more South Africans can carry enough savings through working life to secure an income when work is no longer possible.”
