JOHANNESBURG - A first-of-its-kind survey of more than 1 million South Africans shows that 46 percent have a lack of trust in the retirement industry while 41 percent have made no provision for retirement at all.

This is according to the first 10X Retirement Reality Report (10XRRR) which showed the extent of South Africa’s private retirement savings crisis and its pending impact on government resources in the coming years, as well as the savings disparity among racial groups and the massive divide between men and women.

The report, commissioned by 10X Investments, showed a profound lack of understanding of what they have saved and what they need to have saved among existing clients of the retirement industry.

Steven Nathan, founder and chief executive of 10X Investments, said the industry had amassed wealth at the expense of its clients, who frequently discovered how poorly their retirement products had performed only when it was too late to do anything about it.

“The industry’s messaging makes strong emotive appeals. It’s high time that the facts get some air time,” he said.

The survey also highlighted the gender pay gap in South Africa, where women are understood to earn around a quarter less than their male counterparts, which has a knock-on effect on retirement savings, and that the gender pay disparity is often “exacerbated by the increased likelihood that women’s careers will be interrupted during pregnancy and child rearing”.

A total of 36 percent of female respondents said they neither saved nor invested and 37 percent saved cash but did not invest it, while very few women, only 16 percent, reported investing their savings in order to grow their wealth.

Emma Heap, head of growth at 10X Investments, said if women were not investing their money for growth they would have little chance of beating inflation and having enough money to draw a decent income after retirement.

“Hopefully the report will inspire women to take control of their finances and ensure their money is working as hard for them as they are for it,” said Heap.

Meanwhile, research commissioned by Old Mutual into the financial behaviour or employed millennials found that only 44 percent are investing in pension or provident funds, preferring to start putting money away for retirement only late in their working lives.

According to the 2018 Old Mutual Savings and Investment Monitor, one in three baby boomers have no formal retirement fund provision.

Marius Pretorius, head of marketing for Retail Savings and Income Solutions, said that with a tax-free savings account (TFSA), investors pay no income tax on interest generated, no capital gains tax and no dividend withholding tax.

“This means your money is free to grow. What also make a tax-free savings account popular is its flexibility and accessibility. You can withdraw your funds at any time with no penalties, and access them through most major financial services companies and banks.

“But it’s the affordability of a TFSA that is its best feature. You can open a TFSA with as little as R200 with the Old Mutual Maximised Interest Fund,” said Pretorius.

- PERSONAL FINANCE