Sanlam report paints bleak picture on S.African savings habits

Sanlam, a leading financial services group, has recently released its latest Benchmark Survey, shedding light on the changing trends in retirement funds and pension savings in South Africa. The report paints a grim picture of the country's saving habits, revealing low savings rates and high levels of indebtedness among South African consumers. Kanyisa Mkhize, CEO at Sanlam Corporate, joined CNBC Africa to discuss the insights gleaned from the research and the implications for the industry. Mkhize emphasized the importance of understanding consumers' shifting behaviors and driving better engagement to ensure improved outcomes for members as they approach retirement. The shift from a business-to-business (B2B) to a business-to-consumer (B2C) model has prompted Sanlam to focus on closer interactions with members and strategies to influence positive financial behaviors. Mkhize highlighted the impact of regulatory reforms in guiding consumer behavior, such as the emphasis on annuitization and retirement benefit counselors to deter pension withdrawals. While some positive changes have been observed, including increased awareness around savings, challenges remain, with many individuals facing financial constraints and resorting to withdrawing their pensions when changing jobs. The report underscores the urgent need for interventions to address these issues and promote a culture of long-term financial planning and security. Mkhize discussed the role of technology, particularly artificial intelligence (AI), in improving financial literacy and expanding access to affordable financial advice. AI advancements offer a promising avenue to reach a wider audience and empower consumers to make informed decisions to secure their financial futures. The conversation also touched on the trend of delayed retirement, driven by a mix of financial necessity and personal choice. Mkhize highlighted the industry's efforts to encourage increased savings contributions, preservation of funds, and flexible retirement solutions to accommodate individuals seeking to extend their working years. The evolving landscape of retirement planning calls for innovative product offerings that cater to diverse needs and preferences, from traditional employees to self-employed individuals entering retirement age. As South Africa navigates these demographic shifts and economic challenges, stakeholders must collaborate to ensure a sustainable balance between older workers' continued participation in the workforce and creating opportunities for the younger generation amid high youth unemployment rates. With a deep commitment to reimagining financial solutions and promoting financial wellness, Sanlam remains at the forefront of driving meaningful change and shaping a more secure future for all South Africans.