More people turn to stokvels

Johannesburg = In 2008, 29% of South Africans had some sorts of savings product, whether formal or informal, the latest FinScope survey has found.

Formal investments show a slight increase from 8% in 2007 to 10% in 2008. Of the South Africans who have a formal investment product, the majority are white and Asian.

Informal savings has increased over the past three years. In 2007, 13% of people had an informal savings mechanism, as opposed to 15% in 2008. The increase in informal savings products from 2007 to 2008 was driven by stokvels. Stokvel growth is most evident in the black population, having increased from 7% in 2007 to 11% in 2008, the survey revealed.

"In 2008, people expressed pro-saving sentiments. Sixty percent of people believe that if one saves and invests regularly, eventually the small amounts will add up and 29% of people have a good idea of what interest or returns they get on their investments.

"People seem to be more concerned about saving money for old age. In 2008, 55% of people were worried about having enough money for old age, compared to 46% in 2007. Although South Africans seemed to be worried about providing for their old age, we do not see a marked increase in their provisions towards saving for retirement.

"In both 2007 and 2008, only 13% of people had some sort of retirement plan. In 2008, the main reasons that people cite for not having a pension or retirement plan are not having a job (48%), not having money to invest (32%) or never having thought about it (9%).

"When investigating people's knowledge of retirement-specific terms, people seem to understand only the very basic of terms and this may be one contributor the lack of provision for retirement and old age," FinScope said.

- I-Net Bridge