“There has never been a time of greater promise, or greater peril.”
Klaus Schwab, founder and executive chairman of the World Economic Forum
Highlights from the 2016 survey in numbers:
- Only 1 in 5 retirees will be able to retain their current standard of living in retirement, say Principal Officers of stand-alone funds. This number is estimated to be significantly less for members in commercial umbrella schemes.
- Despite the impact of longevity, normal retirement ages are still hovering at around 63 years.
- Cost is no longer the primary decision factor when employers consider whether to migrate fund administration to a commercial umbrella fund platform. Efficient administration has been cited as an equally important attribute for 56% of stand-alone funds.
- For 73%, loss of control of decision-making remains the number one deterrent for changing administration platforms to an umbrella arrangement.
- 50% of stand-alone funds make use of a financial adviser on a pay-per-use remuneration basis to assist members with financial retirement decisions.
- More than half of stand-alone funds (56%) do not believe that providing members with access to robo-advice is suitable for their fund’s profile of membership.
- 4 out of 5 participating employers in umbrella funds have never considered moving to another fund. On average employers have been with the same commercial umbrella scheme for more than 8 years.
- Participating employers are of the opinion that there is a joint responsibility between members’ own responsibility (40%) and employer and HR’s responsibility (32%) to encourage members to preserve their retirement benefits on withdrawal.
- Participating employers are targeting a net replacement ratio of 67.3% of pensionable earnings with at least 43% weighing in that it is not a suitable tracking measurement, as members do not understand the concept and too many variables and assumptions are used in the measurement.
- Retirees claim that they only discovered what retirement benefits they had in place within 2.8 years of their retirement date.
- Only 1 in 3 retirees believe that they have sufficient capital to last for the rest of their lives.
Sanlam Employee Benefits´ annual series of symposia aimed at the South African retirement fund industry kicked off on 3 May 2016 in Gauteng.
Our goal? To unearth the issues in our industry.
Consulting views which challenge industry boundaries.