The Retirement Funding in South Africa 2022

Retirement Funding in South Africa

South Africa’s retirement industry, with assets in excess of R4.6tn, has one of the highest assets to GDP ratios in the world, but only 7 to 10 million individuals have retirement savings products, out of an employed labour force of about 15 million. Treasury is planning to implement a two-pot system, where all pension funds, pension preservation funds, provident funds, provident preservation funds or retirement annuity funds will have to allocate contributions from 1 March 2023 to a new retirement pot and a savings pot. At present fund members have to either resign or be retrenched before they can get access and cash out their entire pension funds.

Recent Changes

South Africa’s retirement funds sector experienced significant change in the past few years, largely focused on stronger regulation to protect members’ interests. This includes the proposed two pot system, which entails creating a savings portion and a preservation portion with a third going to an accessible savings pot and two thirds to a retirement pot subject to full preservation until retirement. According to draft legislation published for public comment by Treasury on 31 July 2022, the two-pot system will be implemented from 1 March 2023, although it would more likely happen in three to five years.

New Regulations

The offshore limit on South African asset allocation of 30% globally and 10% in other African markets have been combined into one limit of 45%, and there are new allocation limits for local infrastructure projects, which are expected to encourage private retirement savings funds to fund infrastructure. Both are expected to significantly change investment opportunities for fund managers.

Report Coverage

This report on retirement funding in South Africa includes information on the state and size of the industry, its major players and various corporate actions and developments, as well as regulatory and other developments that affect the sector. There are profiles of 26 companies including all the notable pension funding players such as Sanlam, Ninety One, Old Mutual, Coronation, Allan Gray and the state-owned Public Investment Corporation