Cape Town - It is unlikely that South Africa will follow the
path of developed European countries by extending the official retirement age,
as South Africa does not have an ageing population, therefore South Africans
need to start adequate provision for retirement, says Windall Bekker,
partner at Rezco Investment Consulting.
As the first month of 2013 comes to a close, most people are
breathing a sigh of relief as their January salaries are finally paid, and for
most, their New Year resolutions are now long forgotten and in the past.
However, if there is one set of New Year resolutions that
should not be forgotten, it is the steadfast intention to ensure adequate
provision for your retirement.
Bekker says this is particularly important as many people
who believe they can simply carry on working after the normal retirement ages
of 60 or 63 are often disappointed.
“In our experience, employers are not willing to extend the
retirement age of employees unless they have specialist skill sets that cannot
be easily found elsewhere.
Those members who do have specialist skill sets already tend
to be higher income earners and are more likely to have provided sufficiently
for their retirement, and so do not generally need to extend their working
“One of the problems is that we tend to see lower skilled
retirement fund members, who have not provided for their retirement adequately,
needing to extend their working lives - and employers not being open to the
Bekker says it is also unlikely that South Africa will
follow the path of developed European countries by extending the official
retirement age, as South Africa does not have an ageing population.
“Combined with the extremely high levels of unemployment,
especially among younger people, this means it is highly unlikely we will see
retirement ages extended. Of course,
older fund members with specialist skills remain in demand and will continue to
be in a position to extend their working lives.”
For those people who believe they do not have sufficient
retirement capital, there are various options available.
“Firstly, people need to reduce their lifestyle expectations
post-retirement and accept that they will not be as financially secure as they
would have liked. If they are still working, it is critical that they reduce
their current consumption levels and increase monthly contributions to their
retirement fund and try to put lump sums such as bonuses into their retirement
He notes that in tougher economic climates it may also be
advisable to take other steps, such as making sure that you have sufficient
savings to last if you become unemployed.
“Previously, people used to assume that three months of
savings was sufficient to enable them to find another job but increasingly, and
in the current economic environment, a year is no longer an unreasonable
Bekker says it is also advisable to ensure that there are
two breadwinners in the family and that these people ideally work for different
companies in order to reduce the possible impact if a company decides to
“Should a redundancy happen and you are unable to preserve
your retirement fund, then it is crucial to ensure that the money is placed
into another investment vehicle, for example your mortgage bond, which will
reduce debt levels but can still be easily accessed when required.”
He says it is a good idea for anyone who is committed to
providing adequately for their retirement to speak to a qualified financial
“People should, however, take special care when selecting a
financial adviser and check such issues as whether they are independent or tied
agents, whether they have the required qualifications and licences, and whether
they are incentivised to recommend any particular products,” Bekker says.