Ongoing Lack of Awareness of What It Takes to Retire Comfortably

The annual Sanlam Benchmark Survey of retirement funds provides an insightful assessment of the state of the retirement industry and highlights trends among funds and their members. An ongoing theme is a general lack of understanding among members about what is required to accumulate enough savings to be able to retire comfortably.

The 2025 Sanlam Benchmark Survey involved interviews with more than 70 stand-alone funds, 168 participating employers in umbrella funds (up from 100 in 2024), and over 500 consumers.

The survey of funds painted a different picture from the survey of consumers. Six in 10 funds said their average member would not retire with enough by the average retirement age of 64 to maintain their standard of living. Yet most consumers indicated that they believe they will have saved enough to retire comfortably by the age of 58. In reality, Sanlam Corporate’s internal data shows the age at which most South Africans can afford to retire comfortably is closer to 80.

A related concern is where and at what stage of their lives consumers are seeking financial advice. Almost half (49%) of consumers said they turn to Google for general financial advice, while 44% said they would seek retirement planning advice only within 10 years of retirement, with another 7% saying such advice was not necessary. By leaving retirement planning until this late stage means there may not be enough time for any adjustments to meaningfully affect the outcome.

The lack of understanding is further reflected in the statistics showing that 49% of members are unaware of their pension options at retirement and one in five consumers say they haven’t engaged with funds regarding their benefits because they “don’t know enough about retirement planning”.

Nzwa Shoniwa, Managing Executive at Sanlam Umbrella Solutions, put it in a nutshell: “You cannot act on what you don’t understand,” she said. “And right now, the cost of that lack of understanding is being carried by individuals, families, and the economy.”

Inadequate contribution levels

A rule of thumb in the industry is that, if you contribute over a working career of 40 years, a contribution level of 15% of your pre-tax salary will enable you to retire with a pension of at least 75% of your final salary. The later you leave saving for retirement, it’s obvious that the higher the contribution rate must be – according to the Discovery website, the contribution level rises to 23% if you begin saving when you are 30 years old and to 37% when you’re 40. If you begin only at 50, you would need to put away an unrealistic 74% of your salary to retire comfortably at 65.

The Sanlam survey shows that average contribution levels are not high enough, after costs and premiums for group risk cover have been deducted, for the average member, even saving for 40 years, to retire comfortably. Among stand-alone funds, the average member contribution was 7.02% and the average employer contribution 10.21%, totalling 17.23% (down from 17.30% in 2024). The average umbrella fund contribution was 7.59% from employers and 6.27% from members, totalling 13.86%. However, costs and risk premiums bring these figures down by 3.40%, taking average actual contributions to savings down to 13.83% and 10.46% in stand-alone funds and umbrella funds respectively.

The survey also highlighted the concerning numbers of fund members depleting their savings pots since the “two-pot” system was introduced in 2023 and those cashing in their vested pots (savings accumulated prior to the new system) when changing jobs. Over a third (36%) of members said they had made withdrawals from their savings pot, and of those who had resigned from a fund, 47% said they had cashed in all their savings in the vested pot.

The experts at Sanlam emphasised a focus on financial education as key to improving outcomes. Kanyisa Mkhize, Chief Executive at Sanlam Corporate, said: “We’re seeing people make life-altering financial decisions without the information, support or advice they need. But the right intervention at the right moment can shift outcomes. The opportunity is there – we just need to scale it.”