South Africans Contributing Less to Retirement Funds

July 24 - The findings of the 28th annual Sanlam Employee Benefits survey, which scans the trustees and principal officers of over 200 retirement funds in South Africa, reveal several interesting trends.

The most worrying is that the pattern of employees and employers contributing less overall to retirement funds is continuing. On the flip side, however, the survey shows that there is a greater awareness of the need for socially responsible investments.

Also noted was that members are generally using the internet more frequently for their communication needs.

43% of survey respondents expressed negative feelings towards the South African government's proposed new National Social Security System, while 35% were positive about it. However, only 9% believed that the plan would be implemented by 2010.

Elias Mesilela, the co-author of the survey and chief strategist for financial sector developments with SEB, said: "South Africans continue to be poor savers and the hope is that the government's proposed social security reform will help mitigate this negative trend by compelling every income earner to save for their retirement. Having established a sophisticated and successful fund management business, South Africa's retirement fund industry will have an important role to play in the National Social Security System as part of a public private partnership, communicating the need to start and maintain consistent savings, as well as efficiently administrating and growing accumulating funds."

In 2006, the average contribution to retirement funds stood at 11.5%. That number has dropped to 10.9% in 2008. Employer contributions dropped from 10% in 2006 in 9.5% this year, while employees contributed 5.5% this year, compared to 6% two years ago.