Alexander Forbes on the latest trends & investments in SA’s retirement industry

In a recent interview with CNBC Africa, John Anderson, Head of Investments, Products and Enablement at Alexander Forbes, discussed the latest trends and challenges facing South Africa's retirement industry. The interview highlighted key findings from the annual member insights analysis conducted by Alexander Forbes, which focused on one million individuals with retirement savings through their employer. The report revealed that many individuals are still struggling to adequately prepare for retirement, with the average retiree having saved only 31 cents for every Rand of their final salary, far below the recommended 75 cents needed for a comfortable retirement. The impact of the COVID-19 pandemic was evident in the findings, as many individuals experienced salary cuts, lost jobs, or utilized their pension savings to survive. Despite these challenges, only 30% of employers implemented contribution relief schemes at the onset of the lockdown, signaling a temporary pause in retirement savings for some individuals. By the end of 2020, the majority of employers had resumed contributions to retirement funds, with only 5% still maintaining relief schemes. One significant trend highlighted in the report was the shift away from active investment strategies towards default portfolios among members. This change reflects a broader trend in the industry towards simplifying retirement savings and increasing long-term preservation. While financial literacy and gender pay inequality remain key challenges, there are proactive steps that can be taken to mitigate these issues. Employers play a crucial role in encouraging savings through occupational schemes, implementing default strategies, and improving communication with employees. Individuals are also encouraged to increase their engagement with retirement planning and start saving early to benefit from compound interest over time. Looking ahead, the introduction of a 'two bucket system' by national treasury is expected to further support long-term preservation and help individuals balance short and long-term financial needs. By leveraging the combined efforts of the government, employers, and individuals, the retirement industry in South Africa can work towards ensuring a more secure financial future for its members. Overall, the insights shared by John Anderson shed light on the ongoing challenges and opportunities within South Africa's retirement industry, urging stakeholders to take proactive measures to improve savings rates, financial literacy, and gender equality to secure a better future for retirees.