“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.

Consistency is the only currency that matters: is a well-known slogan of one of South Africa’s leading asset managers.

Two recent experiences highlighted to me that a very important question to explore is what will in the future be the role of the consultant in commercial umbrella funds? This is an important issue given the massive growth in this market.

Article : David Gluckman

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