Saving for a rainy day
Only about six percent of current working South Africans will conclude their working years with a comfortable retirement.
ONLY about six percent of current working South Africans will conclude their working years with a comfortable retirement.
This shocking statistic was pointed out by Finance Minister Nhlanhla Nene at a recent briefing, after the national Treasury proposed the implementation of tax incentives with the purpose of rewarding responsible taxpayers.
Apart from having a regular retirement fund, the Treasury suggests that people go above and beyond when saving for their futures.
Chief Director for Financial Investments and Savings at Treasury, Olano Makhubela, said, ‘There is a need for South Africans to try and save beyond their retirement because the reality out there is that people tend to treat their retirement savings as an all-encompassing savings vehicle’.
The proposed savings incentive scheme follows the growing concerns about the way in which people are rapidly cashing in their pension funds.
According to Old Mutual, at least 90% of those who resigned or changed jobs in 2013 cashed in their retirement savings.
Deputy Dean in the Faculty of Commerce Administration and Law at the University of Zululand (Unizul), Dr Irrshad Kaseeram, supports the idea of incentives, and considers the topic to be ‘critical’.
‘Nowadays, society aspires to certain living lifestyles, which leads them to become highly indebted.
‘Many people also come from previously disadvantaged backgrounds and therefore do not have experience with savings patterns. There was no family history of savings which means no savings culture was created,’ he said.
In addition to having a retirement annuity, the Deputy Dean advises people to make use of 32 day accounts as he believes this is a great way of helping you with financial security.
‘Stokvel’s are also another useful mechanism which can be used as a savings scheme.
‘Basically, any small savings club work to your advantage,’ Kaseeram added.
In addition to the tax incentive proposal, national Treasury has also amended the Pension Funds Act to allow whistle-blowing protection for board members, valuators and employees who disclose irregularities to the Registrar of the Financial Services Board.
