Today's Labour News

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retirementBloomberg reports that according to Alexander Forbes, SA’s plan to allow savers early access to part of their pension funds will enable significantly better outcomes for retirees than the current system.

The law that commences on 1 September will enable savers to contribute one-third of their savings into an account that’s accessible annually, with the rest only available upon retirement. While the pension fund administrator expects this to lead to a deluge of withdrawals in the near term, the preservation of the larger portion means more savers will be able to retire more comfortably. “For new members going forward, they’re expected to have a 2 to 2 1/2 times better retirement outcome,” Alexforbes Solutions executive John Anderson indicated on Wednesday, adding that this would be so even if a client withdrew the maximum allowed from the accessible savings portion. According to Momentum, only 6% of South Africans are able to enjoy a comfortable retirement, with the rest unable afford their current lifestyle when they reach that stage. The average South African can expect to earn only 16% of their working salary in retirement and so have to rely on relatives for financial support or risk falling into retirement poverty. The legislation change will also allow savers a once-off opportunity to withdraw as much as R30,000 when the system changes. Alexforbes estimates that the industry will see outflows of about 1% to 2%, with as much as R100 billion exiting funds.

  • Read the full original of the report in the above regard by Adelaide Changole at Moneyweb

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