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As unclaimed benefits pile up, many of the untraceable beneficiaries are struggling to retire. Photo: Gallo Images.
- Mercer and the CFA Institute have released their twelfth edition of the Global Pension Index report.
- The index ranked South Africa’s pension system 27th out of 39 countries, ahead of countries like Austria, Italy, Indonesia and South Korea.
- However, Mercer warned that future pensions will be affected by reduced retirement contributions, lower returns on investment and the inability of governments to allocate more resources to social security due to the increase in debts in the majority of the countries.
Despite Covid-19 disrupting South Africa’s retirement industry as government interventions to deal with the economic fallout of Covid-19 gave companies and their employees a rare opportunity to reduce or suspend their contributions retirement, our pension system remains stable.
According to the Mercer CFA Global Pension Index, which measures the adequacy, sustainability and integrity of pension systems among some of the world’s largest economies, South Africa scored higher than countries such as Austria, Italy, Indonesia and Korea. South.
Mercer, who is a strategic partner of South Africa’s largest retirement manager Alexander Forbes, said that retirement income would always be a victim under Covid-19, as historically low interest rates, job losses and the Increased public debt will reduce the resources available social protection in the future, added a new cocktail of problems to pension systems that mostly need reform even before the pandemic.
“The economic recession caused by the global health crisis has led to a reduction in pension contributions, lower returns on investments and higher public debt in most countries. Inevitably, this will affect future pensions, which means that some people will have to work longer while others will have a lower standard of living in retirement, “said Dr. David Knox, Mercer’s senior partner and lead author of the study.
However, of the 39 retirement systems assessed worldwide, covering almost two-thirds of the world’s population, the South African pension system was ranked 27th and ranked among those with some good features but also significant risks and risks. shortcomings that needed to be addressed.
The problem lies in the “adequacy” of retirement savings and income income in the country, as well as the sustainability of the system, given that millions of older people in South Africa depend on social grants. But these two areas of concern showed minor improvement from 2019.
Mercer’s report suggested that South Africa should increase the level of support provided to the elderly poor, increase contributions made to retirement funds by the working population, but also introduce mandatory savings for workers and conservation requirements when people they change jobs.
“In terms of sustainability, it recommends increasing the coverage of employees in occupational pension plans, thus increasing the level of contributions and assets, as well as introducing a minimum level of mandatory contributions in a retirement savings account.”
