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Status Quo on Industry

Status Quo on Industry. IRF Conference 2013 RA Eboru. Retirement industry. A scheme for vulnerable works that possibly combines both member and government co-contribution. Challenge & Opportunity. 2.7m old age pensioners, total expenditure R3bn from R122bn. Social Assistance:

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Status Quo on Industry

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  1. Status Quo on Industry IRF Conference 2013 RA Eboru

  2. Retirement industry A scheme for vulnerable works that possibly combines both member and government co-contribution Challenge & Opportunity 2.7m old age pensioners, total expenditure R3bn from R122bn Social Assistance: Child Support State Old Age Pension Disability, Forster Care Care-Dependence Grant National Heath Insurance Gap Funding: Vulnerable worker segment Unemployed LFS Other Formal Retirement Schemes: Occupational Schemes: 85% members Voluntary-Based Schemes 11% - 15% of members Contribution Schemes Noncontributory Schemes 12m members; R2tr (RAs R264bn; LA R180bn) Government Taxes Workers and Employers Source: Diagram adapted from SA Social Development 2011

  3. SA Labor Market Analysis core contributors formal schemes Employee Benefits Schemes (pooled assets) Life/Risk AUM R1.14trill Pension R2trill UIF : R45bn 12m active members in formal retirement schemes (NT; 2013) Employed in formal sector 13.7m (incl all industries) Non Labor Force 15.7m people 5.5m PAYE taxpayers 5m SITE taxpayers (SARS Report 2010) 1m - 2m members not linked to a formal scheme (calculation est.) Total Labor Force 33.3m (64%) people Active Labor Force 18.4m Unemployed 4.7m (26%) seeking work assumed to be in informal sector possible contributors to informal schemes core contributors informal schemes Informal Schemes Incl. Stokvels & Burial societies 8m members +R44bn AUM,45% unbanked (African response survey; 2011) Inactive Labor force 14.9m Assets managed by fund managers Total AUM R1.2tr (ASISA; 2012) Total population size of 49m (2013; LFS)

  4. Value Chain; Sector Analysis 2012, Formal Retirement Sector Product examples 967 DCIS 319 FCIS Beneficiaries linked to members Advisory functions 7k registered schemes 3k schemes with active members Agents Consultants Investment Managers Scheme providers Trustees Members Employers 34% of occupational schemes 90% voluntary schemes 185 registered administrators Standalone Underwritten Industry Specific schemes The futuristic intent is to achieve a cost efficient value chain, with little burden on member contributions without comprising on retirement benefits Source: Registrar of pension funds; STATS SA; ASISA

  5. Basics of retirement savings

  6. Basics of retirement savings: further considerations

  7. Questions & Discussions IRF Conference 2013 RA Eboru

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