Meeting Customers’ Retirement Needs and the Effect on the Retirement Age

Meeting Customer’s Retirement Needs and the Effect on the Retirement Age Is there really a normal retirement age? Labour legislation doesn’t stipulate a retirement age No one may be unfairly discriminated against because of their age (Section 187 Labour Relations Act) General understanding that the "normal" retirement age is 55, 60 or 65 (section 187 (2)(b)) Employer and employee must agree on a retirement age Employment contract A company norm (Pension or Provident Fund Rules) Company policy.

Meeting Customer’s Retirement Needs and the Effect on the Retirement Age Is there really a normal retirement age? Many surveys - vast majority of retirees will be well short of their needs Later retirement can add significant financial benefits New pressures – Longevity, investment performance, later entry etc. Social considerations – Youth unemployment (40%) transformation So how should the needs of members, employers and society be balanced?

Meeting Customers’ Retirement Needs and the Effect on Retirement Age

“I actually think the whole concept of retirement is a bit stupid, so yes, I do want to do something else. There is this strange thing that just because chronologically on a Friday night you have reached a certain age... with all that experience, how can it be that on a Monday morning, you are useless?” Stuart Rose

The “right” retirement age? Depends on your perspective: – Governments – Individuals – Companies

Governments Ratio of working to non-working population important for economic growth Cost of old age benefits Older workers making way for younger? Demographic dividend

Old-age dependency ratios Source: Economist

Old-age dependency ratios Source: World Bank

Companies Reasons to keep it lowReasons to push it out Employee pressureBetter retirement outcomes Group life costsLongevity Older employees generally costlierRetention of experience Making way for new bloodKnowledge workers - healthy employees Manual labourers – health of workers Predominantly female workforce Choosing NRA for a retirement fund

Individuals Lifetime income

The longevity challenge for individuals

A radical thought for retirement funds Youngsters (20-30) – no retirement fund membership Middle aged (30-45) – focus more on risk cover Older ages (45-NRA) – maximise retirement savings

A radical thought for retirement funds Some considerations – Addresses lifetime income challenges – Younger members don’t preserve anyway – Save on admin of youngsters with short tenure – Behavioural challenges – get into habit of not saving … difficulty introducing later – Everyone’s unique – options – Tax – maximum tax deductible contributions