• Sharebar
Sunday, January 1, 2012
Waiting game


South Africans are increasingly saving toward short-term commitments, such as their children’s education, rather than retirement funding needs. In addition, the number of people with personal loans has declined from 19% to 11% in the last year, although the percentage of those who’re struggling to repay them has increased year-on-year. These are two of the interesting findings of the fifth Old Mutual Savings and Investment Monitor, issued towards the end of last year.

                One consequence is that there is a great dependency on the government to provide for respondents in their old age. “This has remained constant over the last two years and indicates that we will have a large number of people who retire with no provision for their old age,” observes Lynette Nicholson, chief researcher of Old Mutual. “One in two South Africans believes that they will rely on the government and/or their children in the future.”

The survey also noted that 75% of respondents claim they now wait until they have enough money before buying, and that the number of respondents who have credit cards has dropped from 37% to 29%.

                She says that overall, “we’re still saving less, but we’re also coping better because we’re more careful with managing our finances and we’re more willing to cut back on luxuries.”

                The Savings and Investment Monitor is a bi-annual survey of working metropolitan households in South Africa and tries to identify trends in savings patterns and behaviour.

                The latest statistics show that 40% of South Africans are saving less than they were a year ago.

                The survey also found that:

·         88% of respondents were affected by the recession, up from 82% six months ago;

·         75% now wait until they have saved before buying, rather than buying on credit;

·         36% of black respondents belong to a stokvel - a significant decline from July 2011, but stokvels are still a major economic force, worth around R38.6 billion per year;

·         8% decrease in credit card ownership;

·         Over 50% of South Africans feel that saving for education is more important than saving for retirement. This view is particularly strong in Black households where two out of three agree;

·         One in two working metropolitan South Africans do not contribute to a pension or provident fund, nor do they have a retirement annuity.


Nicholson says the study revealed the continuing power of stokvels: around 36% of black respondents belong to stokvels, contributing an average of R520 per month. “Apart from quick access to money for emergencies such as school-fees and uniforms, and paying off debt, stokvels also attract members because they’re trusted and flexible,” says Nicholson. Old Mutual estimates the value of stokvels in South Africa to be R38.6billion per annum (this excludes burial societies and grocery schemes).

                Marshall Rapiya, CEO of Old Mutual South Africa says the company has found through this research that consumers are still hungry for more knowledge about ways in which to save properly, with more than 80% of respondents saying they want to learn more about how to save.

                “The formidable power of stokvels is also an opportunity for us. We can use them to reach consumers and to empower them with the financial education they need to save and invest for their future even when they have limited resources.”

Copyright © Insurance Times and Investments® Vol:25.1 1st January, 2012
696 views, page last viewed on February 26, 2020