Tag: retirement savings

On 10 September 2021, Mauritius officially reopened its borders to South Africans, ending the 18-month travel ban imposed on SA visitors. The Mauritius Tourism Promotion Authority (MTPA) openly welcomed South African tourists back to the Mauritius shores, which is a token of the relationship between the two countries.

In the weeks prior to the Medium-Term Budget Policy Statement (MTBSP), South Africans await more clarity from National Treasury on their proposal for limited pre-retirement withdrawals and the logistics required to make this happen.

South Africa has one of the lowest household savings rates in the world. To encourage the culture of savings, the government introduced tax-free investment and tax-free savings accounts in 2015 to incentivise good savings habits.

South Africa’s retirement outcomes will improve radically if all retirement funding contributions are kept invested when fund members change jobs. Other quick wins include increasing the minimum government pension; delaying the government retirement age beyond 60 years; and refocusing the industry from saving a lump sum at retirement to providing a sustainable income in retirement.

Saving and investing consistently is essential when planning to build a large enough nest egg to retire comfortably. The latest 10X Retirement Reality Report showed that out of 15 million economically active South Africans, 67% have no retirement plans.

Proposed changes to the Pensions Funds Amendment Bill, currently before Parliament’s Standing Committee on Finance, which will allow retirement fund members to access a portion of their retirement savings in cash before retirement as a guarantee for a loan, should be viewed with caution.

Although the official statistics for South Africa’s divorce rate during COVID-19 are yet be released, globally, the pandemic sent divorce rates soaring by up to 30% or more during 2020. According to DIY Legal, South Africa ranks in 83rd place out of 154 countries for divorce. 

Money matters and finances continue to be a widely talked about subject. The pandemic has not only been onerous and taxing on everyone’s lives, but it has also created undue financial pressure on households globally. Instead of being overwhelmed by unnecessary expenses this year; look at ways or areas where you can save and invest your money. Unplanned finances can push people towards unnecessary short-term debt, which should be avoided at all costs.

Even after the final reforms are in place investors will remain free to be their own worst enemy. Almost 10 years after National Treasury embarked on its mission to strengthen South African retirement savings, as reflected in the Taxation Laws Amendment Bill of 2020, the final reforms are scheduled to come into effect on March 1 but, unfortunately, fund members will still be free to sabotage their own retirement.

Currently controlling more than US$110 trillion (more than 20 times the US federal budget), the power the asset and wealth management industry has in shaping the future is unparalleled. With global assets under management projected to grow by up to 5.6% per annum to US$147.4 trillion by 2025, it can shape a future which is better for investors, shareholders, the economy and the wider society.