Johannesburg - South Africans are not saving enough for
retirement because they are putting money aside for their children's education,
the 2011 Old Mutual Retirement Monitor released on Tuesday has found.
"The possibility exists that some respondents regard
their children as a form of substitute retirement policy," Old Mutual
Corporate MD Bongani Madikiza said.
"However, irrespective of respondents' views on the
role of their children in their retirement, it remains very concerning that
only 54% of respondents who are currently 10 years or less away from retirement
are actually saving for that retirement," he said.
The survey found that the primary savings motivation of
respondents aged 35 to 49, was the need to save for their children's education.
Lack of awareness about retirement savings and contribution
to retirement schemes was a key reason why the majority of South Africans were
not saving enough for their retirement.
"... (I)t is clear that long term, mindset-changing
interventions are needed in order to educate people regarding disciplined
retirement savings from an earlier age," said Madikiza.
"As a society we also need to investigate mechanisms
that help make this affordable for the majority of South Africans," he
said.
Seventy percent of respondents believed their contributions
towards retirement were 'about right' while 15%
said they were contributing too little towards retirement.
Around 58% said they expected to need to work after
retirement, primarily for financial reasons.
"Unfortunately this again points to the fact that
individuals are not able to accurately assess their post-retirement needs and
carefully calculate their pre-retirement funding requirements to meet those
needs," said Hugh Hacking, umbrella fund manager at Old Mutual Corporate.
Fifty-eight percent of respondents earning less than R3 000
felt that death, funeral and disability cover was more important than
retirement savings.
Many of them were even doubtful about reaching retirement
age.
"This mindset is concerning as it does not take
inter-generational savings into account and contributes to the cycle of
poverty," said Madikiza.
Few people knew the value of their retirement savings.
"Only 23% of respondents knew the approximate value of
their retirement savings," said Hacking.
"In addition the respondents reported contributing on
average only 8% of their salary, while it is generally accepted that on average
people should contribute around 15% of salary."
The survey comprised 1 005 face-to-face interviews about
pre-retirement perceptions and respondents' confidence about the financial
provision they had made for their retirement.