By Colin Horwitz
I came across an article by Katie Jones of Vision Capital, an international investment group based in London. Unfortunately, it is dated 2018 but, if anything, I am sure that the situation has not remedied itself since then. The article was based on a slide produced by a company called RACONTEUR, a publishing company also based in London and from what I can make out in the fine print it was on behalf of Schroders a renowned global investment manager. As it is an extremely busy slide and I do not have their permission to publish it, I will just give you an overview of the highlights.
They interviewed 22 000 people from 30 countries focusing on retirement incomes and retirement aspirations of these people. South Africa was included in the study. Their statistics are as follows. Please note that all these respondents were employed at the time of the survey.
• 51% of global employees with a workplace retirement fund are concerned that they will not have enough money in retirement.
• 12% of annual incomes are saved towards retirement on an annual basis.
• 57% stated that they will not have enough saved for retirement purposes.
• 75% stated they were not on course to attain their required financial retirement objective at retirement age.
• 39% stated that they will continue working after retirement and
• 27% stated that they will do volunteer work, I suppose to keep busy. I presume that this is part of those who will be able to afford their retirement.
Interestingly, South Africa was one of the countries that appeared on the graphic. Once again, please note that this applies to people employed by businesses that provide retirement funding structures. Here are some numbers for good old SA.
• 80% of final salary at retirement, of those currently employed, is the number that those interviewed perceived they will need at retirement.
• 65% of them assume that they will have enough money to retire on. Well, we all know what assumption is.
• 59% of final salary is the average number that retirees actually receive. Based on what we at Morebo see, this number is high. I suppose the result depends on the level of sophistication of the sample, which is not stated. From experience, most people do not consider the cost of healthcare into retirement, which increases at a much higher rate than inflation on an annual basis. This number is 51% less than what those currently employed are expecting to be receiving at retirement. And this, as far as I am concerned is a troubling number.
If it’s any consolation, South Africa is far from the worst, but, obviously, it becomes personal if you are directly affected.
One our main activities at Morebo is financial education to organizations, businesses and investor groups. Our management and consultants believe that education is key to financial wellness and work hard at plugging this gap that is prevalent in the South African environment. Should you require this service for a group of people, in the business or social environment, please contact us through our website or call us on 010 8225100. It is free of charge within the Gauteng area and we will be happy to provide the necessary resources.
Getting back to returns, we all know that global economy is taking strain and I have taken it upon myself to ignore the things that I have no say and control over and concentrate on those that I can influence. The last few years have been horrendous for South African Investors, and it has affected everyone and every business in the country. However, we are beginning to see some light ahead, although it is quite distant. There are many positive things happening in South Africa and it will slowly gain momentum. And as for me? I am proudly South African, Morebo is a proudly South African business staffed by amazing proudly South African people and we are determined to make a difference in people’s lives.
So far 2019 has proven to be a better year for those invested in the MPowered range of investments. Our most aggressive targeted fund, the MPowered CPI + 6% has returned 7,8% for the Voluntary Fund and 9,2% for the Compulsory Fund for the nine months ending September 2019. This is still not what we at Morebo would like to bring to you, our investors but, we are headed in the right direction.
Last but not least and I must say, it feels weird to be writing this in the middle of October; on behalf of all at Morebo, here’s our end of year message to you and yours.
May 2020 be the year in which all your dreams come true and may they all be enjoyed in good health and surrounded by love and happiness. For those travelling, be safe and to everyone, may your festive season be one of joy.
Regards from all of us at Morebo.