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.