Mitigating the South African retirement-income shortfall crisis
Orientation: National Treasury acknowledges that 90% of all South African retirees will not have adequate financial resources in order to sustain themselves. Research purpose: This study aimed to address the retirement income shortfall by assessing possible changes to prudential retirement fund reg...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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AOSIS
2018-08-01
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| Series: | Journal of Economic and Financial Sciences |
| Subjects: | |
| Online Access: | https://jefjournal.org.za/index.php/jef/article/view/176 |
| _version_ | 1818337616310829056 |
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| author | Adriaan E. Pask Johan Marx |
| author_facet | Adriaan E. Pask Johan Marx |
| author_sort | Adriaan E. Pask |
| collection | DOAJ |
| description | Orientation: National Treasury acknowledges that 90% of all South African retirees will not have adequate financial resources in order to sustain themselves.
Research purpose: This study aimed to address the retirement income shortfall by assessing possible changes to prudential retirement fund regulations.
Motivation: Asset allocation plays a pivotal role in achieving the required rate of return of any portfolio. However, the restrictions on asset allocation imposed by article 28 of the Pension Funds Act of 1956 limits pension funds’ ability to achieve adequate returns.
Research approach: A survey was conducted among chief investment officers (CIO) of the top 25 South African investment management companies.
Main findings: The study proposes changes to the Income Tax Act, the Collective Investment Scheme Control Act and Regulation 28 of the Pension Funds Act.
Managerial implications: The proposed framework should result in fewer pensioners becoming dependent on the state for their pension and empower pensioners to have greater amounts of post-retirement savings.
Contribution: The contribution of this article is the proposed changes to the regulatory framework, which could – ceteris paribus: (1) Enable SA retirement fund investors to contribute to the retirement wealth pool in an unconstrained manner. (2) Enable SA retirement fund assets to increase investment returns by as much as 1.21% per annum. (3) Increase the average SA GRRs from the current projected 10.0% to 10.7% by 2045. (4) Increase the efficacy of the existing tax incentives. (5) Reduce spending requirements for grants in the national budget. |
| first_indexed | 2024-12-13T14:58:03Z |
| format | Article |
| id | doaj.art-f7fed6485aa749ee96f41259aa8e7ba7 |
| institution | Directory Open Access Journal |
| issn | 1995-7076 2312-2803 |
| language | English |
| last_indexed | 2024-12-13T14:58:03Z |
| publishDate | 2018-08-01 |
| publisher | AOSIS |
| record_format | Article |
| series | Journal of Economic and Financial Sciences |
| spelling | doaj.art-f7fed6485aa749ee96f41259aa8e7ba72022-12-21T23:41:12ZengAOSISJournal of Economic and Financial Sciences1995-70762312-28032018-08-01111e1e1010.4102/jef.v11i1.176332Mitigating the South African retirement-income shortfall crisisAdriaan E. Pask0Johan Marx1PSG Wealth LtdDepartment of Finance, Risk Management and Banking, University of South AfricaOrientation: National Treasury acknowledges that 90% of all South African retirees will not have adequate financial resources in order to sustain themselves. Research purpose: This study aimed to address the retirement income shortfall by assessing possible changes to prudential retirement fund regulations. Motivation: Asset allocation plays a pivotal role in achieving the required rate of return of any portfolio. However, the restrictions on asset allocation imposed by article 28 of the Pension Funds Act of 1956 limits pension funds’ ability to achieve adequate returns. Research approach: A survey was conducted among chief investment officers (CIO) of the top 25 South African investment management companies. Main findings: The study proposes changes to the Income Tax Act, the Collective Investment Scheme Control Act and Regulation 28 of the Pension Funds Act. Managerial implications: The proposed framework should result in fewer pensioners becoming dependent on the state for their pension and empower pensioners to have greater amounts of post-retirement savings. Contribution: The contribution of this article is the proposed changes to the regulatory framework, which could – ceteris paribus: (1) Enable SA retirement fund investors to contribute to the retirement wealth pool in an unconstrained manner. (2) Enable SA retirement fund assets to increase investment returns by as much as 1.21% per annum. (3) Increase the average SA GRRs from the current projected 10.0% to 10.7% by 2045. (4) Increase the efficacy of the existing tax incentives. (5) Reduce spending requirements for grants in the national budget.https://jefjournal.org.za/index.php/jef/article/view/176retirement-income-shortfallprudential regulationpension fundsinvestmentspoverty |
| spellingShingle | Adriaan E. Pask Johan Marx Mitigating the South African retirement-income shortfall crisis Journal of Economic and Financial Sciences retirement-income-shortfall prudential regulation pension funds investments poverty |
| title | Mitigating the South African retirement-income shortfall crisis |
| title_full | Mitigating the South African retirement-income shortfall crisis |
| title_fullStr | Mitigating the South African retirement-income shortfall crisis |
| title_full_unstemmed | Mitigating the South African retirement-income shortfall crisis |
| title_short | Mitigating the South African retirement-income shortfall crisis |
| title_sort | mitigating the south african retirement income shortfall crisis |
| topic | retirement-income-shortfall prudential regulation pension funds investments poverty |
| url | https://jefjournal.org.za/index.php/jef/article/view/176 |
| work_keys_str_mv | AT adriaanepask mitigatingthesouthafricanretirementincomeshortfallcrisis AT johanmarx mitigatingthesouthafricanretirementincomeshortfallcrisis |