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SA's pension system ranked 31st out of 43 countries - what does that mean?

21 October 2021 8:23 PM
Tags:
The Money Show
Bruce Whitfield
Gender pay gap
Pension
Mercer
SA pension system
gender pension gap
Vickie Lange
Global Pension Index
CFA Institute
Global Pension Index Report

Bruce Whitfield discusses the 2021 Global Pension Index Report with Alexander Forbes' Vickie Lange.

South Africa's pension system has been ranked 31st in the world out of 43 rated countries, below Peru and Brazil.

The top three countries are Iceland, the Netherlands and Denmark.

The data is contained in the 13th annual CFA Institute Global Pension Index Report (MCGPI) released by Mercer on Thursday.

Image: 2021 Highlights from Global Pension Index Report (Mercer CFA Institute)

Bruce Whitfield interviews Vickie Lange who is Head of Research, Best Practice and Academy at Alexander Forbes.

Unfortunately, South Africa's lagging behind... with an overall score of 53.6 (out of 100).

Vickie Lange - Head: Research, Best Practice & Academy at Alexander Forbes

The index looks at three sub-categories: adequacy where we scored 44.3, sustainability where we scored 46.5, with some positive news for integrity where we scored 78.5.

Vickie Lange - Head: Research, Best Practice & Academy at Alexander Forbes

What that really means is that we just don't have enough people in the actual retirement system to start with. Secondly, our biggest challenge is leakage from the system before retirement - members not actually keeping their money saved until the day they retire.

Vickie Lange - Head: Research, Best Practice & Academy at Alexander Forbes

Is the fact that we do not have a forced saving mechanism in a high-functioning environment the nub of the problem?

What you typically see in countries scoring higher on adequacy is a mandatory contribution going into the retirement system, she affirms.

The 2021 edition includes a special chapter on the gender pension gap, which was found to exist in every retirement income system.

Essentially there's an extension of the gender wage gap, so we're seeing a gender pension gap as well.

Vickie Lange - Head: Research, Best Practice & Academy at Alexander Forbes

Generally speaking women have shorter careers, normally due to care responsibilities... and that is effectively reducing their lifetime income.

Vickie Lange - Head: Research, Best Practice & Academy at Alexander Forbes

Listen to the full discussion on The Money Show:




21 October 2021 8:23 PM
Tags:
The Money Show
Bruce Whitfield
Gender pay gap
Pension
Mercer
SA pension system
gender pension gap
Vickie Lange
Global Pension Index
CFA Institute
Global Pension Index Report

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