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Johannesburg - A crisis in retirement provision is
lurking as investment returns over the next five years are likely to be weak
while inflation rises, according to chief economist at Sanlam Jac Laubscher.
Laubscher says that in the next few years investment returns will be lower
on average than in the five years ended mid-2008, while inflation is likely to
be slightly higher.
He notes that a balanced portfolio comprising 60% equities, 20% bonds, 10%
listed property and 10% cash yielded an average return of 19.3% per annum
during the period ended mid-2008.
"For the same portfolio, the best one can hope for over the next five years
is an average return of between 8% and 13% per annum," he says.
"Especially those who will or have to retire in the next few years must
remember this: the only defence against lower investment returns is to increase
your rate of contribution," cautions Laubscher.
He notes that the global financial crisis that started in August 2007
developed into an economic crisis in the fourth quarter of last year, which
plunged the global economy into its first recession since the Second World War.
But the potential retirement provision crisis is not getting as much press.
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