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BL Premium reports that the Sanlam Benchmark Survey, a yearly analysis of the local retirement fund industry, shows that retirement fund members suspended their contributions across all fund types for an average of four-and-a-half months in 2020 due to the Covid-19 pandemic.
The survey, which was released on Tuesday, also shows that 27% of stand-alone retirement funds and 41% of participating employers in umbrella funds suspended contributions to their retirement funds as the pandemic and consequent lockdowns resulted in mass retrenchments and severely constrained consumer finances. But, by opting to suspend retirement fund contributions, investors may have missed out on the extraordinary market rally in 2020. The survey, in which data was collected between 17 March and 28 April, covered 90 stand-alone funds, 10 stand-alone trade union funds and 100 participating employers in commercial umbrella funds. “The ultimate financial effect of Covid-19 was the reduced contribution level due to contribution suspensions,” said Sanlam’s Kanyisa Mkhize, adding that the pandemic had been a big setback for SA retirement fund members. The industry also recorded an increase in the number of employees cashing in a significant proportion of their withdrawal benefits. Almost one in three funds surveyed experienced a reduction in workforce due to retrenchments and liquidations up to the end of April 2020. Almost 80% of funds surveyed said their members experienced either a reduction in pay, a reduction in their expected annual increase, or were forced to take unpaid leave or experienced retrenchments or liquidations.
Read the full original of the report in the above regard by Garth Theunissen at BusinessLive (paywall access only)