Is the FSCA preparing for auto-enrolment to expand retirement coverage?
After years of stalled progress, the FSCA’s recent comments suggest National Treasury may renew its push for auto-enrolment.
After years of stalled progress, the FSCA’s recent comments suggest National Treasury may renew its push for auto-enrolment.
The ‘imminent’ COFI Bill will introduce the licensing of retirement funds (including public sector funds), stricter board member standards, and enhanced oversight of contributing employers.
Fund members lost at least R470m after N-e-FG’s high-risk investments went south in 2021. Now, two of its directors have been fined R30m each.
Earlier counselling can help members to make more sustainable financial choices, allowing them to embrace retirement with less stress and greater financial integrity.
Financial advisers warn that even small withdrawals can significantly erode retirement income over time.
Financial planner Lara Warburton says clients believe trustee-endorsed annuities don’t offer enough flexibility or returns to sustain them through long retirement periods.
In September, Sanlam received more than 83 000 withdrawal claims, with most coming from members aged 35 to 44, many of whom had a replacement ratio below 50%.
The system is driving a shift in how members engage with their retirement funds. Members are monitoring their savings and reacting to market fluctuations, says Old Mutual.
Despite relatively low overall withdrawal rates, 24% of claimants are using their retirement savings for home or car repairs and 21% for settling short-term debt.
Financial advisers should understand the broader implications on tax planning, retirement savings, and investment strategies to guide their clients effectively.
More than 60% of two-pot withdrawal applicants have come from low-income groups, according to Momentum’s latest figures.
South Africa has the potential to boost its savings rate and secure a more stable source of funding for fixed investments, essential for driving economic growth.
The Sanlam Benchmark Survey also shows that more respondents are turning to online sources for product information instead of using a personal adviser.
Investors can maximise their tax benefits by contributing extra funds to their retirement annuities before the tax year ends.