Retirement outcomes have not materially changed over the past 15 to 20 years. And despite several years of retirement industry reforms, National Treasury estimates that 94% of members in employer funds are not on track to achieving desired retirement outcomes – a finding that’s supported by Old Mutual Corporate Consultants’ 2023 OnTrack™ research, where more than 90% of companies have the poorest rating of just one star.
Based on those numbers, the retirement industry has to change – and it will take strong leadership to effect that change. In that spirit, Old Mutual hosted the inaugural Old Mutual Thought Leaders Forum in August 2024. The event brought together leading thinkers – both local and international – to co-create workable solutions that have fund members’ best interests at heart.
Experts agreed that those solutions lie in improving retirement outcomes. In his opening keynote address, South Africa’s Deputy Minister of Finance David Masondo added that the key to both improved outcomes and expanded access to the retirement system lies in job creation.
‘Our country has made significant progress in our 30-year journey of freedom and democracy,’ he said. ‘Many people who were historically excluded are now active participants in the economy. However, our journey is far from over. There are still too many people who are unemployed and too many who live in poverty. Income and wealth inequalities persist, and millions of South Africans cannot retire with dignity, while millions cannot save for retirement at all. We have to grow the economy to address these problems.’
Learning from the world’s best retirement systems
The 2024 Old Mutual Thought Leaders Forum’s plenary sessions built on Deputy Minister Masondo’s remarks. Dr David Knox, Senior Partner at Mercer Australia, shared lessons from the world’s leading pension systems. ‘We are dealing with how people are going to live in their retirement, their living standards,’ he said. ‘We need to do better than we have in the past.’
In the panel discussion that followed, Chris Axelson, Head of Tax and Financial Sector Policy at National Treasury, spoke to the real-world challenges that South Africa’s retirement industry reforms (including the Two-Pot Retirement System and, in the future, auto-enrolment) aim to address. ‘A lot of the pushback we get on [autoenrollment] is that people are really struggling,’ he said. ‘Wages are low, even with minimum wage. People are in debt. They need these funds to live. What's the point of having retirement savings if you can't live today? These are the balances that we have to create.’
Leading in the new world of work
Samad Masood, Associate Vice President at the Infosys Knowledge Institute, UK, kicked off the second panel by exploring the Infosys Knowledge Institute’s findings into the future of work, focusing particularly on hybrid work, artificial intelligence, and the shift towards a human-centric approach to the organisation’s employee value proposition.
He also debunked a widely held belief about the link between hybrid work and employee retention. ‘We asked companies that had increased hybrid and flexible working and those that reduced it whether their retention had increased or not,’ he said, ‘and we found that remote working does not correlate with better employee retention. That's not the thing that matters. Those companies that increased their retention and those that decreased retention were doing the same amount of remote working. What really drives retention is wellbeing.’
What is the future of retirement savings?
The third session explored collective defined contribution (CDC) plans, and asked whether CDC schemes might deliver better member outcomes than the defined contribution (DC) schemes that dominate South Africa’s retirement industry.
Colin Haines, EMEA Chief Commercial Officer for Aon’s Wealth Solutions Business Group, presented a set of global findings into CDC funds, which sparked a broader discussion around the investment volatility South African retirement fund members experience with DC funds. Fatima Vawda, Chief Executive Officer at 27four, echoed the sentiments of many panellists by saying, ‘We’ve really got to change the mindset of South African retirement funds and trustees and people who are involved in the system, and we’ve got to move away from this capital protection mindset to an income protection mindset. Once you go beyond that, everything just opens up.’
Visionary industry leaders share their perspectives
The final session saw Old Mutual Group Chief Executive Officer Iain Williamson, Old Mutual Corporate Managing Director Prabashini Moodley, Old Mutual SuperFund Chairman Nhlanhla Nene and Old Mutual Investments Managing Director Khaya Gobodo share their thoughts on the preceding discussions.
Moodley summed up the disruptive nature of the conversations by commenting: ‘It’s time to retire the concept of retirement. Income for life seems to be the way of the future.’ She closed the Thought Leaders Forum as she had opened it, by inviting people from across government, big business, industry regulators, global consultancies, Old Mutual, and the Old Mutual SuperFund – including fund members themselves – to keep the conversation going.
Discussions at the Old Mutual Thought Leaders Forum were informed by Old Mutual’s proprietary research and surveys of pre-retirees, post-retirees and SMEs, which were in turn augmented by further research from leading industry partners and peers like Mercer and LIMRA. This research is unpacked in greater detail in a special issue of Old Mutual Mindspace, which is available to read online.
Read the Old Mutual Mindspace Thought Leaders Forum special issue here.