The term retirement is superfluous for most South Africans, mainly because of bad savings advice or because of no saving at all. However, for those who can retire, it is critical to continue managing their investments and to have a keen interest in what they invest in.
Reforms to align South Africa’s retirement fund rules have been on the agenda for almost a decade. The long-awaited annuitisation of provident funds was only adopted into legislation in March this year.
All retirement funds are now aligned and a retiree may receive one-third of their retirement savings as a lump-sum payment while the rest will be preserved for future income needs in a personal retirement savings product such as living or life annuities.
Retirement savings
Political rumblings about access to the retirement pot in SA have created a great deal of tension in recent years. The socio-economic situation and political instability in the country have seen a massive rise in emigration and very wealthy South Africans and their money have already left.
Cheryl Howard, independent fiduciary training and business coaching specialist, said at the SA Institute of Taxation’s annual Tax Indaba that younger people seem to be loath to invest excess savings into retirement products. The current limit for contributions is 27.5% of total annual income, capped at R350 000 per year. This has not been adjusted since 2016.
Howard says the retirement industry for younger people – between 30 to 45 years – seems to be diminishing. Some experts believe it can become non-existent because people are looking at alternative savings options.
Denne historien er fra 22 October 2021-utgaven av Finweek English.
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Denne historien er fra 22 October 2021-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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