Page 33 - MiNDSPACE Issue 1 2022 - Old Mutual Corporate

In January 2021, Malusi Ndlovu was appointed Director: Large Enterprises at Old Mutual Corporate after holding the reins at Old Mutual Corporate Consultants for nearly four years. He is a qualified actuary, a fellow of the Actuarial Society of South Africa and a member of the Institute of Directors
in South Africa.
National Treasury has proposed retirement fund reforms which could have far- reaching consequences for South Africans’ retirement savings. Why are they on the table now, and what is the likely impact?
By Malusi Ndlovu
It’s important to understand why this new system is being proposed, and why now, and what its impact might be on the industry and on people’s financial wellbeing.
With this two-pot proposal, Treasury is hoping to solve two key issues related to retirement: coverage and outcomes.
On the one hand, not enough people belong to retirement funds. Depending on which statistics you use, you’ll find that only 50% to 60% of working South Africans are investing in a retirement funding structure. Meanwhile, National Treasury claims that only 6% of the working population are on track
expertSPACE retirement
we’ve known for a long time that reforms
are needed in South Africa’s retirement industry. National Treasury’s recent proposal of a two-pot system, which would
allow for pre-retirement withdrawals from one pot while ensuring the preservation of savings in the other, is part of that reform process.
WHAT PROMPTED THESE REGULATORY CHANGES?
to retire without having to sacrifice their standard of living. (Old Mutual Corporate’s own research puts that number between 3% and 6%.)
Covid-19 and the subsequent lockdown and recession have brought retirement coverage and outcomes into
the spotlight. Some employed South Africans have had
their incomes reduced – or had no income – through the lockdown, and the government is looking for ways to provide relief to people in similar situations.
ISSUE 1 2022 | 29
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