Welcome to CGS Insurance Brokers

PENSIONS ARE NEVER ENOUGH

Pensions are never enough
             Few elderly have savings to boost their income

By TARALYN MCLEAN

Business Reporter

Retiring with enough money to last a lifetime is a scenario many South Africans are unprepared for.  The recently-released bi-annual Old Mutual Savings and Investments Monitor findings estimate that around 45% of South Africans in formal employment have no form of retirement savings.  Old Mutual regional general manager Sandile Bolani said: “The challenge is to make people aware of how vital it is to make provision for retirement.”  The sooner savings are started, the better.  A government monthly pension is R1 140, and while there may be a slight raise given from this year’s Budget, announced in February, inflation is likely to overtake it.  “Saving R500 a month for 40 years is far preferable to having to save R10 000 or even R15 000 a month for, say, 10 years to achieve the same result.  The time to begin is now, “ Bolani said.

“Do people save enough for their retirement?  The short answer is ‘No’, “Berea Gardens executive director Mike Schulze said this week.  “The situation has changed radically over the past 20 to 30 years,” he added.  The days when retirees were part of a “defined benefit retirement scheme” are over.  This is where retirees are given a fixed “salary” every month from their retirement scheme, with fixed increases going forward.  More common now is for retirees to be given a large lump sum at a predetermined age.  This money must then be invested wisely and payments drawn from the investment.  The problem with this, Schulze said, is that what might have been sufficient to retire on 10 years ago may not be sufficient today given the rate of inflation.  “There are also serious curved balls, such as the cost of post-retirement healthcare.  “Medical aids are expensive.”

People also live longer, so they have to stretch their cash for much longer after they stop working.  “We have quite a few over the age of 100, and many in their 90s, so age is a factor,” Schulze said.  “For some of our affluent retirees, there are serious concerns that their funding will not last their lifetime.”  Many had lost funds over the past few years due to the grim global economic climate or funds invested had grown slower than expected or required.  “The South African government needs to look at how they can provide help for people over the age of 60 in terms of benefits and tax, things like that, “Langham House and Kennersley Park general manager Noel Clark said.

The waiting list for two-bedroom cottages at Kennersley Park has been closed for seven years.  At Berea Gardens, the waiting lists are so long they have been closed.  “Most of us are on government pensions, which are next to nothing, Berea Gardens resident Graham Broadley, 66, said.  “The rent goes up, but you get no increase,” Daphne Dreyer, 86, said.  “We get help from our children or else we wouldn’t survive,” Nella Louw, 81, added.  If you want to prepare for retirement, start now.  Only when I have got to this stage do I see how much I could have gone without to prepare for now.  Even if it is just R10 a month, put it away.”