All data is delayed
See More

SA aims to lift savings, cut budget strain

May 14 2012 14:52

Johannesburg - South Africa is looking to strengthen its social security system by encouraging a higher savings rate among its highly indebted households, which should help economic growth and reduce the burden on state finances, the Treasury said on Monday.

South Africa's gross national saving rate, at 16%, is less than half of its emerging market counterparts such as India. Local households have since 2005 had a negative net savings rate, the Treasury said.

Household debt remains at near record highs and increased access to credit has partly contributed to the poor saving culture that has emerged over the past seven years. About 60% of households' savings is for retirement but the country still has one of world's lowest household savings rates.

Consumer spending has previously driven economic growth in South Africa and high levels of joblessness make it difficult for households to save. Only about 10% of the population is able to maintain pre-retirement consumption levels.

The Treasury also said low income households that save through the formal sectors tend to put money in products that provide easy liquidity.

The Treasury is also looking at ways to discourage people from cashing in early on their pension funds and reduce the costs of the funds.
economic growth  |  south africa



Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Marketing is a big concern in SA's small business community, followed by a lack of confidence and partnering with the wrong people, according to a survey.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The 25 basis points interest rate increase is:

Previous results · Suggest a vote