Saving for Retirement

In May of 2012, the National Treasury released a document raising issues surrounding how best to ensure that South Africans have access to appropriate savings vehicles and that they make adequate provisions for retirement.

In this document Treasury highlighted its concern that only 10% of South Africans are able to maintain their pre-retirement level of consumption after they stop working. Contributing factors to this low level of post-retirement consumption were noted as:

1. Low preservation rates of retirement savings; and

2. The relatively high cost structure of the South African retirement industry.

These two factors, combined with very low personal savings rates, mean that far too many South Africans reach retirement with insufficient capital to meet their income needs.

The consequence of low retirement income is serious as it increases the financial vulnerability of the elderly population, leaving many dependent on family for support. This, in turn, reduces the ability of many young families to save for their own futures.

Given Treasury’s concerns for retirement savings, products such as retirement annuities (RAs) and preservation funds:

· Need to be more cost effective; and,

· Must be able to provide investors with the means to plan for their retirement proactively. This can be achieved by assisting investors understand how much they need to save and the risks associated with their investment choices.

The Marriott Retirement Annuity and The Marriott Income Preservation Fund have an all-in fee of between 0.8% and 1.75% (excl Vat), depending on the investor’s personal portfolio choice, and have been designed to provide the key information that any person saving for retirement needs to know. This information includes:

· The likely value of the investor’s pension/annuity at a projected retirement age

· The likely value of the investor’s capital at a projected retirement age

· The risks that need to be considered

This information will assist pre-retired investors in achieving their retirement income goals by ensuring they build up enough capital and that their investment decisions are well informed. The Marriott pre-retirement products are also designed to ensure that market value fluctuations will not affect the investor’s pension/annuity if the investor moves seamlessly into the Marriott Perpetual Annuity at retirement.