Pension fund industry must ‘get it right’
The new CEO of SA’s biggest pension funds administrator said the industry could do more to lower fees and improve the lives of many struggling South Africans.
Alexander Forbes CEO Dawie de Villiers, who was appointed in November, said there were many things the industry needed to get right to provide security to more people.
“We must get more people in the net. Get more people educated about what it means to save appropriately. At the moment, it’s only the wealthy part of the population that earns an income in retirement. The rest takes cash to cover debt every time they switch jobs.
“I’m not saying ‘fees must fall’ is the only thing. If you look at the type of solutions we can do on holistic institutional basis for individuals, it will mean low fees, it will mean more value for money and more benefits for members,” he said.
De Villiers, who spent 25 years at Sanlam and headed the insurer’s employee benefits unit for five years, said the industry had not been transparent in the past and if it could improve this it will become easier for more people to save and keep their retirement savings invested.
The latest retirement savings surveys by different retirement fund administrators show that fewer than 10% of people who are members of retirement funds in South Africa are able to retire comfortably. Alexander Forbes’s own Member Watch survey which was released in November shows that only 5.17% of retired pension fund members were able to get 80% or more of their last salary at retirement. A different study by 10X’s shows that 41% of 11.9 million economically active South Africans had no retirement plan in place at all.
The National Treasury has introduced a number of retirement reforms to reduce costs and improve fee disclosure, among other things.
One of the regulatory changes that all pension funds will have to comply with from March 1 2019, is providing cost-effective annuity strategies for their members inside the fund. In the past, retirement fund members had to buy an annuity from retail providers when they reached retirement.
De Villiers said these changes made the employee benefits industry the place to be and Alexander Forbes expected to make a success of it. Alexander Forbes is the largest retirement benefits administrator in SA with about 1.4 million members.