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South Africa’s tough economic climate over several years, coupled with the financial pressure put on households by the Covid-19 pandemic, is threatening to create a lost generation in the country who will not be able to retire because they simply could not save enough during this period.
With the protracted recovery from the pandemic, and the fact that most of those who are saving for retirement find themselves part of the sandwich generation (where they must financially support children as well as ageing parents), is there a focus on survival at the expense of saving for a period that is 30 to 40 years in the future?
The current reality
The 2020 Sanlam Benchmarks Survey, which presents a snapshot of retirement vehicles across the country, paints a worrisome picture when it comes to current savings towards retirement.
It indicates that eight out of every 10 local retirement fund members have experienced a reduction in their annual salary increase and/or their net income.
In addition, some of these people took a forced sabbatical or went through a retrenchment process during the pandemic.
The survey adds that up to 41% of employers who offer umbrella funds offered financial respite to fund members by suspending employees’ retirement savings contributions in 2020.
It notes that both standalone retirement funds and employers in umbrella funds remained committed to meeting their risk cover premiums during the pandemic.
The survey referenced statistics from Statistics SA which point out that:
There is, however, a glimmer of hope within the pressures the pandemic is exerting on those saving for retirement. The survey points out that millennials are well versed in managing the balancing act of spending money on education and making their children’s needs a priority as well as saving for retirement.
For the full article visit www.moneyweb.co.za
