BL Premium reports that insurer Old Mutual is pushing for an overhaul of SA’s pension regime and has called on authorities to follow the UK’s route in ensuring better retirement outcomes for retirees.

Industry data shows that only 6% of retirement fund members are on course to retire comfortably. According to Old Mutual’s Fred van der Vyver, it was time for SA to transition to collective defined contribution (CDC) schemes to protect employees’ retirement security. He argued that the current dominant system in the market, the defined contribution pension system, was “fundamentally unfit” for today’s world. CDC schemes, introduced into the UK in 2021, are seen as a bridge between defined benefits (DB) and defined contribution (DC) schemes. Fund members and employers make fixed contributions into a collective fund, and these schemes then pool together funds with other members. “CDC offers a more predictable outcome. It ensures that your income in retirement better reflects your lifetime of contributions — not the mood of the market when you exit the workforce,” Van der Vyver pointed out. According to data from Old Mutual, CDC schemes have the potential to deliver up to 30% higher retirement incomes than standard DC arrangements. In a bid to try to improve pension outcomes, SA last year implemented the two-pot retirement system. Van der Vyver said further reforms were needed, and that an overhaul was urgent. “The longer we delay structural changes to deliver more consistent outcomes, the more we undermine public trust in retirement saving. We must build a system that rewards long-term commitment and protects people from forces they can’t control. The current model simply doesn’t yet deliver that,” he said.

• Read the full original of the report in the above regard by Kabelo Khumalo at BusinessLive (subscriber access only)

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