More than half of the pensioners in South Africa cannot cover their monthly costs and are running out of capital, according to statistics from the 2013 Benchmark Survey.
Half of retirees have experienced a significant decrease in income at retirement, with an average 31% difference between retirement income and the last salary when employed.
Not only do older people have less, they face steeper inflation than the rest of the population.
Higher medical expenses are a major contributor.
"This country does not look after its old people," the general manager of the SA Association of Retired Persons, John Benwell, told The Times. The association represents 85000 pensioners.
Pensioners face inflation of 15%, according to Benwell.
Subsidised transport and accommodation would relieve some of the pain, he said.
The statistics from Sanlam 2013 Benchmark Survey reveal the following:
David Gluckman, head of employee benefits future positioning and research at Sanlam, said: "South Africans are generally not financially prepared for retirement."
Even though a large proportion of working South Africans belong to a pension fund, they are not putting away nearly enough for their later years.
David McCarthy, a Treasury specialist on retirement policy, said that by international standards South Africa had quite a high participation rate in the pension system. But the benefits were undermined by workers cashing out pensions when they changed jobs and by high charges such as distribution costs and the cuts taken by fund sales agents.
Sanlam's survey shows that the industry and employers are aware of the insufficient capital so many have at retirement.
Only about one in seven principal officers of standalone funds believes their members will have enough to retire, according to Gluckman.
And only about 18% of the representatives of participating employers believe their members will have enough capital at retirement.
Presenting "Charges in South African Retirement Schemes", the last of five discussion papers compiled by the Treasury, McCarthy told reporters last month that "the South African retirement system does seem to be expensive".
Recurring fees gnaw away at the capital that savers try to build up.
According to McCarthy, who did not want to single out the pension funds involved, fees of 3.5% as opposed to 0.5% could, over a lifetime of contributions, halve the lump sum that will be available to the retiree.
The discussion papers will now form the basis of talks between the Treasury and retirement funds.
Professional services firm Deloitte said it was "cautiously optimistic" about the Treasury's proposed retirement fund reforms, even though it had concerns about the lack of clarity on administration and governance related to the planned amendments.
Tinkering with cost structures alone will not solve the problem, according to Gluckman. "To expect that the entire retirement shortfall gap will be addressed by the reform process is unrealistic." He suggests:
"Many of our pensioners are living from hand to mouth," Benwell said. One in four Transnet pensioners, for example, scraped by on less than R2000 a month, he said.
Source: Times Live: 13 August by TJ Strydom