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Cape Town - Over half of pensioners had a shortfall between their income and expenses in the last year, according to the recently released 2014 Sanlam Benchmark Survey.
Just under 60% of retirees were in this situation, compared to 51% last year and 33.1% in 2011.
"The main contributor is taking money out of the system before they get to retirement," Sanlam employee benefits CEO Dawie de Villiers told Sapa.
"Today, people have freedom of choice. It's in their own hands and they don't save enough and they don't preserve."
The survey has conducted a comprehensive review of the local retirement industry for 34 years.
The latest survey polled over 900 retirement fund members, pensioners, trustees, and principal officers.
It found that one in five pensioners supplemented their retirement income with part-time work.
Almost 40% had depleted the lump sums that they accessed at retirement and it took an average of 2.4 years to erode these benefits.
Over 60% of pensioners were responsible for adult dependants while 23% took care of one or more child dependants.
De Villiers said the picture of an average pensioner had changed dramatically since they first started the survey.
Thirty years ago, South Africa had pensions with defined benefits, where the company promised to pay a specified monthly amount on retirement based on the employee's earnings history.
"It was an incentive to work for a company until you retired. People didn't live as long as they are now so the burden on the company wasn't as big as it is on the individual now," De Villiers said.
In the last decade, the industry had changed to a defined contributions scheme, where employees and perhaps employers contributed to individual accounts.
Only employer contributions were guaranteed, not benefits.
De Villiers said people often took money out of their funds when changing jobs.
This lump sum was used to go on holiday, to pay debt, or for other luxuries and expenses.
However, those who had stayed in the system were also struggling. Their investments were often too conservative and external global economic conditions were an influence.
Another factor was people living longer.
"In the last 60 years, since 1950, the average life expectancy in the world has improved by 20 years. That is more improvement than in the 6 000 years before that so it's accelerating quite a bit," De Villiers said.
"We as a society have to adjust to accommodate that. The rules and legislation and way of operating are still the same as 40, 50, or 60 years ago."
He said the industry should seriously consider whether a formal retirement age was necessary.
If it was, the age should be made higher or there should be the option of phased retirement.
Phased retirement meant people started working fewer hours or days after a certain age or, alternatively, were allowed to stay in a pension fund to accrue retirement benefits while in temporary employment.
De Villiers said National Treasury should continue to try catch more people in the retirement net.
"I think there is a big incentive to save for retirement but we must continue to look at those incentives because it is in the whole country's interest to make it attractive."
