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Taking Stock: Shaping the Future

Keyline: Analyse, Evaluate, Shape

The overarching theme: Building on a decade of retirement reform (see above)

Sub-theme:        Aligning the sector with the future

Some thoughts to consider when crafting messages and topics

In South Africa, on the continent and globally, the journey of retirement reform is crucial to the success of society as a whole. As an organisation IRFA supports all stakeholders involved in the evolution of the retirement sector. The 2022 conference will reflect and analyse on what has been achieved to-date, and more importantl,y what still needs to be done. Crucial to the conference agenda is looking at the specifics of what is needed in terms of operational, policy and regulatory intervention to ensure that the reform initiatives benefit fund members and society as a whole.

As always we will invite a range of thought leaders to reflect and also examine what still needs to be done and the best way of getting there/achieving these critical outcomes.. 

Historical background/terms of reference

Retirement reform has been an ongoing theme of the South African policymakers for many years, in 2012 Budget Speech, the then Minister of Finance Pravin Gordhan, announced a series of technical discussion papers on the promotion of retirement savings.

In announcing the proposed reforms the Minister noted “at the end of day government has one interest and that is to ensure that the beneficiaries of the retirement process benefit substantially from their own savings.” He emphasised that  “These are structural changes and a paradigm shift.”

These papers dealt with how best to ensure that South Africans have access to appropriate savings vehicles and that they make adequate provision for retirement as follows:

  • Retirement fund costs: Increasing competition on the basis of price rather than design and encouraging the use of low-cost investment vehicles.
  • Providing a retirement income: Creating retirement income markets and measures to ensure that cost-effective, standardised and easily accessible products are available.
  • Preservation, portability and uniform access to retirement savings: The phasing in of preservation of retirement savings and protecting vested rights.
  • Savings and fiscal incentives: The development of financial products that encourage short- to medium-term savings and reduce the dependency on excessive borrowing by means of tax-preferred individual savings and investment accounts.
  • Uniform retirement contribution model: Harmonisation of tax treatment of contributions to and benefits from retirement funds (pension, provident and retirement annuity funds) to simplify taxation and contribution systems.

Conversations which will be initiated at the 2022 conference/conference streams

 Looking back on what has been achieved to-date:

  • Preservation and portability: Preservation, portability and uniform access to retirement savings
  • Harmonising retirement fund taxation: Uniform retirement contribution model

Examining what is still being worked on:

  • Reducing retirement fund costs
  • Reforming the annuities market

During this time a new regulatory model was also introduced by means of the Financial Sector Regulation Act in 2017 (Twin Peaks) and a key piece of law needed to complete the transition is still outstanding - Conduct of Financial Institutions Bill (COFI).

Thinking outside of the box and into the future

While the 2022 IRFA conference will focus on the reforms introduced and what is still outstanding. Prominent thought leaders will also take the opportunity to identify key reforms that are needed to create a sustainable, socially aware and equitable retirement sector. In doing so, we will look at the pace at which the world has and will change and consider realities such as the 4th industrial revolution, medical science, behavioural science, longevity, millemials and how we align benefit design and products to changing needs. It is imperative that the conversations consider how what we do has a positive impact on the development of our economy to expand savings beyond the priviledged few that have the means to save for retirement.

Key messages

  • How do we build on reforms achieved to-date
  • Do the proposed reforms meet broader socio-economic imperatives?
  • Beyond ESG, looking at behavioural influencers and change in achieving reform objectives
  • The South African retirement model, what is/should be different as opposed to reform initiatives in developed countries
  • The future shape of investments that meet societal needs
  • Systems development and project engineering, do the costs involved in re-engineering these to meet reform goals pose an obstacle?
  • Compliance and its impacts
  • The changing face of retirement for upcoming generations
  • Ongoing holistic support to retirees in terms of wellbeing
  • Out of the box thinking, what else should be done? (Example gender lens investing, simpler, faster, cheaper products, education of members and society in terms of retirement provision and financial acumen)