South Africa’s savings industry has a vital role to play in the country’s growth and prosperity. Amidst rising unemployment, economic pressure, social fragility, and global shifts in work, health, and technology, we have a powerful opportunity – and responsibility – to reshape our long-term savings system to deliver better outcomes for individuals, society, and the broader economy. But we can’t do this alone. Collaboration with, and support from, all stakeholders, including government and employers, is crucial.

The good news is that, thanks to reforms over the last few decades – the latest being the implementation of the Two-Pot Retirement System – we are on the right track. With the consolidation of smaller retirement funds accelerating and evolving digital technologies challenging traditional financial and workforce paradigms, there is growing momentum to fundamentally reimagine how retirement funding, governance, and risk pooling should function in a modern, inclusive, and agile economy.

The most powerful lever

Prof. Adrian Saville, an professor of economics, finance, and strategy at the Gordon Institute of Business Science (GIBS) and director of the GIBS Centre for African Management and Markets (CAMM) proposes six factors that have been proven to drive growth in countries around the world: savings and investment, openness, demography, policies and institutions, education, and healthcare.

From these, Saville derives three key priorities for South Africa:

• Savings and investments: Research shows that countries experiencing fast economic growth typically have savings rates of 25% of GDP or higher. However, South Africa’s gross domestic savings rate currently sits at just 15% of GDP.
• Public-private partnerships: Public-sector investment is the catalyst for private investment.
• Job-creating growth: Even if the country improved on all six factors, the nature of its economic structure means growth would not necessarily translate into employment. The answer is to focus on labour-absorbing sectors, such as tourism and agriculture

The question is: what practical next steps can we take as an industry – together with policymakers, government, and employers – to improve savings and investments for the benefit of the entire country?

Finding solutions to improve outcomes

To understand where we need to go, we must assess where we are. We begin by providing an overview of the current state of retirement and suggesting solutions to improve members’ outcomes. 

Ultimately, the industry must be judged by a single question: are member outcomes improving? While there is still evidence to support the 6% statistic, this year, our Old Mutual Corporate data, research, and insights suggest that we are standing at a moment of both progress and possibility, where the first signs of reform, strong employer design, and member engagement are beginning to show their potential to transform the future of retirement in South Africa.

Our research highlights two effective interventions:

• Ensuring sufficient contributions
• Maximising members’ time in a fund by potentially increasing retirement ages and advocating for preservation when members change jobs.

In both cases, employers have an essential role to play.

Lessons from the Two-Pot system

New behavioural data emerging from early Two-Pot modelling provides further insight into the changes needed to improve member outcomes. Our data shows that members are susceptible to liquidity access, with early withdrawals likely if education and digital guardrails are not in place. This reinforces the need for:

• financial literacy and guided decision-making as core service features;
• smart defaults to protect preservation without disempowering members;
• consolidated fund systems to manage leakage efficiently.

The Two-Pot system must be seen not just as a structural change, but as a behavioural inflection point, where trust, simplicity, and digital support become paramount. However, our modelling further shows that the Two-Pot system is set to have a significant effect on outcomes, improving them by up to two-to-three times in the long term. The seeds of this are already taking root, with signs of preservation evident in the first year. Looking ahead, the question is: how can we harness similar, or even multiplying effects, through broader, coordinated efforts?

Learning from the Australian example

Having built an understanding of South Africa’s reform journey, we can now look at global examples.

In Australia, according to industry veteran Paul Watson, the average Australian now sees significant infrastructure around them that is funded by their pension funds. This offers a view of what four decades of superannuation reform can deliver in terms of sustainable savings growth and economic impact.

Australia’s superannuation system is often held up as a gold standard in global retirement funding, and for good reason. With assets exceeding AUD3.5 trillion and a net replacement ratio among the world’s best, Australia demonstrates what’s possible when scale, default design, and regulation align.

To understand what a successful reform path can look like, we look at Australia’s phased approach over 30 years:

• Compulsion: Australia mandated employer contributions in the early 1990s, laying the foundation for broad-based participation. A roadmap was also put in place to increase minimum contributions from 3% to the recently implemented 12%.
• Default design and governance: Australia introduced strong standards for default funds, member protections, and fund performance measurement and disclosure.
• Consolidation: The market moved from thousands of small funds to a much smaller number of more efficient and better-governed entities.
• Outcomes focus: Today, the system is designed to deliver value to members, with performance scrutiny and portability, and a lifetime income.

Choosing the best solutions for South Africa 

Given South Africa’s unique challenges, the solution is not to replicate the Australian example, but to learn from it and use it to inform our pathway.

The Two-Pot system is an integral part of that path, as it introduces preservation and access principles that nudge us closer to sustainable savings behaviour.

For South Africa, auto-enrolment is an important next step towards a stronger savings industry that can invest meaningfully in infrastructure. Global evidence points to the value of auto-enrolment and minimum contributions in overcoming member apathy and improving coverage. The success of Australia’s superannuation system, which covers more than 90% of the country’s workforce through minimum contributions, is well known. The UK has

had success with its auto-enrolment model, where employees earning £10 000 (R240 000) per year are automatically enrolled in a workplace pension scheme. New members have the option to opt out, yet most stay enrolled. Successful micro pension schemes across sub-Saharan Africa – such as Kenya’s Mbao scheme, Mazima in Uganda, or Rwanda’s EjoHeza savings scheme – also offer lessons worth exploring.

Consolidation to support transformation

Another critical evolution is the continued consolidation of retirement funds. With approximately 66% of retirement funds in South Africa managing less than R500 million in assets, this is almost inevitable. For these smaller funds, achieving the scale, governance, and cost advantages needed to truly benefit members is difficult.

Well-executed consolidation offers:

• improved investment returns through scale and diversified asset allocation;
• lower administration costs and streamlined compliance;
• stronger fiduciary oversight via professionalised governance structures;
• better member support with integrated digital servicing, fewer transitions, and clearer communications.

It also directly enables the other reforms. Preservation becomes easier when exits are limited to fewer channels. Digital transformation is more viable when fewer systems must be retrofitted. Financial inclusion becomes scalable when products and platforms are standardised across sectors.

Consolidation is the scaffolding upon which preservation, adequacy, and efficiency can be built, and should therefore be treated not as a by-product of reform, but as its strategic enabler.

We also argue that further consolidation can support inclusion and transformation, as these funds can use their scale and procurement power to actively drive transformation across the retirement industry.

Technology as a supporting force

While fund architecture and legislation form the system’s backbone, rapid technological change is reshaping the world of work. Leading technology expert Valter Adão warns that business leaders should not start with technology and then look for ways to use it. Instead, they should consider how AI can contribute to achieving their strategic objectives.

According to Adão, there are only three reasons to adopt any technology in a business, and leaders should cut through the complexity and sales talk to focus on these alone. These are:

• the exponential growth dividend
• the exponential productivity dividend
• the exponential experience dividend

As an industry, we should be using technology as a tool to enhance our ability to deliver. AI and digital tools are redefining how funds engage with members, calculate liabilities, assess risk, and deliver advice. In the retirement industry, this translates to:

• mass customisation of retirement journeys via robo-advice and nudging;
• operational efficiency through smart data processing and automated compliance;
• predictive analytics to pre-empt risk (e.g. early retirement triggers and debt distress).

Digital transformation, when integrated with consolidation, enables real-time governance, smarter risk pooling, and seamless member engagement, particularly critical in a Two-Pot future where preservation and access must be tightly controlled and monitored.

The power of employers

In today’s workplace, employees increasingly demand flexibility across all aspects of their value proposition – from working arrangements to compensation structures. For employers, the challenge is maintaining a responsible framework that protects employees from short-sighted decisions that could jeopardise their long-term financial security or leave them dangerously underinsured against life’s inevitable risks, such as death and disability. We also highlight the rising cost and complexity of mental health, as well as the strong link between employee wellness and business outcomes.

In this environment, technology provides both opportunities and challenges. Employers can harness the power of technology to respond to employees’ needs for customisation and flexibility, and to simplify the retirement journey, especially for those most in need.

However, technology is also placing new pressure on human resources professionals. Our Employee Benefits Annual Trends Survey 2025 reveals that human capital and workplace management top the list of leaders’ concerns. Amidst these challenges, employers must continue using the available levers to improve member outcomes.

How to build on the momentum

What’s needed now is bold leadership and coordinated execution. 

We propose six key actions:

• Focus on three priorities: Embed the three priority areas of savings and investments, public-private partnerships, and a focus on labour-intensive industries in national planning to ensure that retirement policy supports economic growth.
• Make outcomes the north star: Use data and behaviour-driven insights to measure success.
• Support consolidation: This is a lever for inclusion, efficiency, and innovation.
• Advance auto-enrolment: Build for further retirement reform in auto-enrolment and coverage. 
• Invest in strategic partnerships: Forge partnerships across the private and public sectors.
• Harness the digital revolution: Leverage technology to deliver personalised communication, education, engagement, and scalable solutions that empower South Africans to save more for longer, and navigate their retirement journeys with confidence. 

The momentum is real, and we are already seeing the results of regulatory reform, policy innovation, and innovative use of technology.

Let’s make sure we keep moving in the right direction.  

*This article originally appeared in the Old Mutual Mindspace Thought Leaders Forum special issue. To read more, click here.