PRETORIA: Households should start saving so as to demonstrate the value of saving from an early age, this was said by the Chief Executive of Sanlam Personal Finance Actuarial, Anton Gildenhuys recently during his lecture on ‘Savings and the retirement reforms in South Africa’ at the Sanlam Summer School in Pretoria.
Sanlam, a majority shareholder of the pyramid structure that owns Botswana Insurance Holdings Limited held its annual Sanlam Summer School for financial journalists and for the first time, the course included journalists from outside South Africa; some coming from Botswana, Kenya, Namibia and Nigeria.
This year’s theme was; The role of savings in growing the economy. Gildenhuys highlighted that clients are not keen to save, therefore it was imperative to convince them to do so.
Asked by Gazette Business if the households fully understand the importance of savings as part of the economic growth, he said “the products are becoming more transparent nowadays and we are currently developing an entire market regulator aimed at designing products that people understand. Savings is a new initiative, and Sanlam wants to improve the existing industry, however the concern comes when they want to over-regulate and they lose the power of the market.” He indicated that the regulation is not different from the past therefore, it needs to reform.
Gildenhuys said there are five papers currently being prepared and are still at consultation level. The five are; Charges in South Africa retirement fund; Enabling a better retirement income; Preservation, profitability and uniform access to retirement savings; Incentivising non-retirement savings, and Simplifying the tax treatment of retirement savings.
As he presented his medium-term budget policy statement recently, Finance Minister Pravin Gordhan said that South Africans’ level of savings is too low to finance the investment they need. “Unless we save and invest more, our aspirations will remain unfulfilled,” he said.
He said it is vital to have faster, inclusive, job-creating growth as without growth, no jobs will be created, there will be no revenue generation to fund social programmes, infrastructure investments, and incentives to support important industries.
Chief Executive Officer of South African Savings Institute (SASI), Elizabeth Lwanga-Nanziri was quoted in CNBCAfrica.com as saying that 30 per cent of South African spenders are living beyond their means due to poor savings patterns and high credit dependence.
“The youth are the biggest culprits and that’s very scary because they don’t have any money management skills whatsoever and the way they view life is totally different. When you talk about planning for retirement that doesn’t ring a bell for them,”
The other category, she said, are the middle income earners, who she said that they are big spenders. “Those are the groups of people that should be saving or putting something aside, seeing that they’re almost nearing retirement. It is very discouraging and worrisome,” she explained.
Lwanga-Nanziri said some of the reasons for the high indebtedness among spenders include medical expenses and the rising high cost of living especially in food and petrol prices.
She said SASI has implemented a number of awareness programmes to provide people with an understanding of basic financial skills, including the Varsity Savings and Teach Children to Save campaigns.
Clients not keen to invest – Sanlam executive
