As an industry standard, we aim to retire on 75% of our final salary. However, our latest Member Insights show that South Africans are falling well short of that, closer to the 40% mark. Only 6 in every 100 members can reach this goal, which is likely due to COVID-19 and early withdrawals.
ALEXANDER Forbes Member Insights found that, on average, working South Africans were projected to retire on only 40 percent of their final salary – a long way off from what is considered ideal.
Current retirees’ starting pensions amounted to 31 percent in 2020, an improvement from the previous year’s 28 percent.
The Member Insights report found that only six in every 100 members could retire on more than 75 percent of their pensionable salary. The 75 percent figure is the one targeted by the retirement fund industry.
The implications of Covid-19 on retirement outcomes found that about 30 percent of retirement funds implemented contribution holidays or reduced contributions. Many of the funds had since recovered and only 5 percent of funds still had these relief measures in place.
The average contribution rates reduced slightly from 14.18 percent to 14.1 percent.
Member Insights also indicated that the gender pay gap in South Africa was still high based on the analysis of the pay gap across the major nine sectors, including the public service.
It says on average, for every R1 a male member earned, a woman member earned 83 cents. The starting pensions of male retirees were 35 percent of their final salary, whereas for woman it was 26 percent.
For more on the Alexander Forbes Member Insights report, read Personal Finance in the Saturday Insider section appearing in the Saturday Weekend Argus, Saturday Star, Independent on Saturday in KZN and the Saturday Edition of the Pretoria News.
Here is the link to the article: https://www.iol.co.za/personal-finance/retirement/south-africans-are-projected-to-retire-on-only-40-of-their-final-salary-alexander-forbes-1b3be455-2ce7-465e-9113-15e15393571f