Share

Mega retirement fund members score more

Johannesburg - Belonging to a mega retirement fund means you pay less in administration fees than a member of a smaller fund, which could result in as much as R800 000 more in benefits when you retire, according to a survey by Sanlam [JSE:SLM].
   
Danie van Zyl, co-author of the Sanlam Benchmark Survey and head of guaranteed investments at Sanlam Structured Solutions, presented the results of the survey at a symposium in Midrand.

He disclosed that an average of 13.3% of the salaries of members of bigger funds goes towards retirement, with 12.3% the corresponding figure for smaller funds.

The difference of one percentage point comes from deductions made from contributions where members of smaller funds (between 101 and 500 members) contribute 1.4% to death benefits, 1.2% to disability cover and 1.2% for administration fees.

Members of larger funds (more than 5 000 members) make a bigger contribution towards death benefits (1.6%) and a smaller one towards disability (1%), but pay only half of smaller fund members' administration fees (0.6%).

Van Zyl said if you look at someone earning a pensionable salary of R8 000 per month who contributes towards retirement, that one percentage point could translate to about R700 000 or R800 000 upon retirement.

The research shows that members of large umbrella funds are in a better position, with those in smaller stand-alone funds paying higher fees.

David Gluckman, co-author and head of research for Sanlam Employee Benefits, said that as part of an industry paying out R10bn of insurance benefits each year, South Africa's large umbrella funds now have over 1 million members and R100bn in assets.

He said there are five main players in the market, and that the economies of scale hold out better retirement prospects for their members.

Gluckman, however, feels this should be swelled to a few more mega funds than the current five, as the competition could result in better benefits for members.

The Benchmark Survey uses independent market research from 188 face-to-face interviews with key decision-makers at sponsoring umbrella funds.

In addition, complementary qualitative research was carried out with a broad cross-section of retirement fund members and retirees in both Cape Town and Johannesburg through six focus groups, supplemented by one-on-one interviews.

 - Fin24

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.00
-0.3%
Rand - Pound
24.11
-0.0%
Rand - Euro
20.62
-0.1%
Rand - Aus dollar
12.38
+0.4%
Rand - Yen
0.13
+0.5%
Platinum
902.37
-2.3%
Palladium
1,004.75
-0.1%
Gold
2,152.94
-0.4%
Silver
24.93
-0.5%
Brent Crude
86.89
+1.8%
Top 40
65,985
-0.4%
All Share
72,193
-0.3%
Resource 10
53,312
-0.0%
Industrial 25
99,623
-0.9%
Financial 15
16,647
+0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders