BusinessLive reports that according to the 2018 Mercer Melbourne Global Pension Index, SA’s pensioners on average received the lowest income of all countries that have a functioning pension system.  

Mercer’s index measured the retirement income systems for 34 countries and indicated that SA’s system was not sustainable because it did not cover enough people or pay a decent income.  The average net pension replacement rate — which measures the percentage of income that a working individual will get when they retire — sits at just 17% of their current earnings.  SA is the worst performer on this indicator.  Mercer recommends that to build a world-class pension system, countries must “ensure the right balance between adequacy and sustainability”.  Its researchers recommend, among other things, that SA should introduce a minimum level of mandatory retirement contributions or increase the level of preservation of benefits when people change jobs.  The Treasury’s retirement reform regulation will come into effect on 1 March 2019, to ensure that provident fund members preserve their cash at retirement.  But, given the increasing unemployment rate and contracting economic activity, SA is probably not ready for mandatory retirement contributions.  The other challenge when looking at setting a minimum level of mandatory retirement contributions is that of the more than 56.2m people in SA, only 16.1m are formally employed.  Of this, less than half (48.2%) had access to retirement benefits in 2017.

• Read this report by Londiwe Buthelezi in full at BusinessLive

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