Status Quo on Industry

IRF Conference 2013RA Eboru

Retirement industry

2

Challenge & Opportunity

Non

cont

ribut

ory

Sche

mes

Social Assistance:

Child Support

State Old Age Pension

Disability, Forster Care

Care-Dependence Grant

National Heath Insurance

Government

Gap Funding:

Vulnerable worker segment

Unemployed LFS

Other

Formal Retirement Schemes:

Occupational Schemes: 85% members

Voluntary-Based Schemes 11% - 15% of

members

Taxes Workers and Employers

2.7m old age pensioners, total expenditure R3bn

from R122bn

A scheme for vulnerable works that possibly combines both member and government co-contribution

Contribution Schem

es

12m members; R2tr (RAs

R264bn; LA R180bn)

Source: Diagram adapted from SA Social Development 2011

SA Labor Market Analysis

3

Total population size of 49m (2013; LFS)

Total Labor Force33.3m (64%) people

Non Labor Force15.7m people

Active Labor Force

18.4m

Inactive Labor force

14.9m

Unemploye

d 4.7m (26%)

seeking work assumed to

be in informal

sector

Employed in formal

sector13.7m (incl

all industries)

1m - 2m members not linked to a formal

scheme(calculation est.)

5.5m PAYE taxpayers 5m SITE taxpayers(SARS Report 2010)

12m active members in formal retirement schemes

(NT; 2013)

Informal SchemesIncl. Stokvels & Burial societies 8m members +R44bn AUM,45% unbanked (African response survey; 2011)

Employee Benefits Schemes (pooled assets)

Life/Risk AUM R1.14trill

Pension R2trill

UIF : R45bn

Assets managed by fund managersTotal AUM R1.2tr (ASISA; 2012)

core contributors informal schemes

possiblecontributors to informal schemes

core contributors formal schemes

MembersAgentsConsultants

Scheme providers

Trustees

Beneficiaries linked to members

Employers 185 registered administrators

Advisory functions

34% of occupational

schemes90% voluntary

schemes

7k registered schemes

3k schemes with active members

StandaloneUnderwritten

Industry Specific schemes

Product examples967 DCIS319 FCIS

The futuristic intent is to achieve a cost efficient value chain, with little burden on member contributions without comprising on retirement benefits

Value Chain; Sector Analysis 2012, Formal Retirement Sector

Investment Managers

Source: Registrar of pension funds; STATS SA; ASISA

Basics of retirement savings

Basics of retirement savings: further considerations

Questions & Discussions

IRF Conference 2013RA Eboru