Collaboration necessary to resolve SA’s savings and
Promoting a culture of saving can help turn the economy around – particularly for African women
The Institute of Retirement Funds Africa (IRFA) has made a point of working with other stakeholders for the benefit of members of retirement funds and the industry as a whole, according to Geraldine Fowler, IRFA vice president.
One of the main areas of collaboration is trying to overcome the problem of 90% of people retiring in near poverty, a problem not unique to South Africa that stretches across Africa and the world.
Fowler points out that research suggests as little as 6% of South Africans are able to retire comfortably.
Furthermore, a lack of savings and adequate retirement provision by working South Africans will continue the burden the state’s budget, due to citizens’ dependence on the state to fund their old age, which is a drain on the country’s economic development.
In contrast, a cul- ture of saving has been a significant contributor to economic success in countries such as India and China, whose gross savings rates are 39% and nearly 50% of GDP respectively, enabling further investment in businesses and infrastructure.
Fowler points out that India’s successful national culture of savings has been one of the cornerstones of the country’s economy and has helped boost economic development. Global investment bank Goldman Sachs predicts India will soon not require foreign investment to fund its infrastructure development.
In comparison, South Africa’s household savings rate is only 16% of GDP and foreign investment is crucial for successful economic development.
Fowler says in order to start addressing this problem that affects the sustainability of the economy, IRFA believes it is important to collaborate with likeminded industry organisations for effective lobbying of government and engaging with the entire industry, and reverting back to fundamentals such as education and the dissemination of information that can be applied practically to improve personal savings, sustainable investment returns and a secure retirement.
“All retirement industry stakeholders need to co-operate and collaborate to strengthen both the savings culture in the country and knowledge in the industry to ensure that South Africans are able to retire enjoying the same living conditions they experienced during their working lives.
“For this reason IRFA has embarked on a more aggressive collaboration process.” Fowler says some of IRFA’s key collaborative partners are: the regulator, which includes the Financial Sector Conduct Authority (FSCA), previously known as the Financial Services Board (FSB) and South African Revenue Services; Batseta — Council of Retirement Funds for South Africa; the Pension Lawyers Association of South Africa (PLA); trustees; and members of retirement funds.
In recent times IRFA has added to these collaborative partners by co-operating with the Chartered Financial Analysts Society South Africa (CFA), the Association for Black Securities and Investment Professionals (Absip) and auditing firms, through its newly founded auditing committee.
One of the areas in which collaboration has been successful is the generation of research material and extension of knowledge from the IRFA’s bank of intellectual capital through the publication of findings, which are distributed to retirement fund members and the general public.