Two ideas increasingly shape how we should think about the responsibility of a retirement fund: Beyond Tomorrow and Caring Beyond Tomorrow. 

The first defines our horizon; the second our promise.

Retirement funds are institutions of the future. Contributions entrusted to them today must provide dignity decades from now, while investment decisions influence economies, communities and livelihoods long into the future.

To think beyond tomorrow is to look beyond the next quarter or investment cycle. It requires an intergenerational perspective, focused not only on creating value today, but on preserving and growing it for those who come after us.

Caring beyond tomorrow gives that perspective its human purpose. Behind every contribution is a person. Behind every investment return is a future pension. Behind every pension is a household. And behind every household is a story of work, sacrifice, family and the hope of a dignified life.

That responsibility raises an uncomfortable question: is South Africa’s retirement system on a sustainable path?

Progress is not the same as success

South Africa has developed a retirement industry of scale and capability. Governance and disclosure have improved, default regulations have been introduced, and the two-pot system represents an important attempt to balance long-term preservation with members’ immediate financial pressures. These are meaningful advances, but the real test is whether more South Africans reach retirement financially secure and whether tomorrow’s members are likely to fare better than today’s.

Recent retirement surveys suggest there is reason for concern. No single survey provides a complete picture, but repeated findings across studies become a systemic signal.

The Sanlam Benchmark’s long-term evidence places the average South African income replacement ratio at about 25%, compared with the frequently cited industry aspiration of about 75%. Just SA’s research arrives at a similar conclusion, identifying a substantial gap between median retirement savings and the amount estimated to be required. The Mercer CFA Institute Global Pension Index adds international context: while South Africa performs relatively well on integrity, adequacy remains its weakest area.

A 25% replacement ratio is not an abstract actuarial measure. It can translate into difficult choices between necessities such as food, electricity and healthcare. The consequences can extend beyond the individual, placing pressure on families, employers and, ultimately, the state.

A chain of connected weaknesses

The retirement challenge is often presented as a series of separate problems: limited coverage, low contribution rates, inadequate preservation, high costs, fragmented savings, late financial advice and unequal outcomes.

In practice, they form a chain. 

Too few South Africans participate in formal retirement arrangements, while many who do fail to contribute enough for long enough. There is also significant leakage from the system. Members may understand the consequences of withdrawing savings, but do so anyway because of debt, unemployment or household emergencies. The challenge is not simply financial literacy. People cannot be educated out of financial distress.

The two-pot system is a thoughtful response to this reality, protecting a retirement component while allowing access to savings. Its longer-term effects will need to be monitored. Repeated withdrawals and frequent job changes could leave members with fragmented balances across multiple administrators.

Costs, governance and incentives are also inseparable. Institutional pricing has improved in parts of the market, but lower fees will not improve retirement outcomes if the benefit is offset elsewhere.

The central challenge is therefore the distance between institutional intention and members’ lived outcomes.

Six reforms deserve attention

A sustainable system requires a connected reform agenda.

First, South Africa must broaden retirement participation beyond traditional formal employment. As leaders and stewards of the industry, we need to recognise informal workers as an integral part of the economy and find innovative ways to extend retirement coverage to them. This is both a social and economic priority, helping to promote financial inclusion, reduce inequality and enable more South Africans to retire with dignity. South Africa can draw inspiration and practical guidance from other African countries, as well as from approaches emerging in Latin America and Asia. 

Auto-enrolment or strongly defaulted participation, supported by existing tax and payroll infrastructure, could gradually extend coverage to non-standard and gig workers. This must be accompanied by an honest discussion about contribution levels required for adequate retirement incomes.

We also have a responsibility to support the broader economy through investments that strengthen businesses, create jobs and drive growth in the communities where our members live and work. In doing so, we can help build a more inclusive economy while strengthening long-term financial security.

Second, umbrella-fund governance should be strengthened around demonstrably independent, member-centred oversight. Trustees and governance structures must have the authority to test service arrangements, demand transparent value, address persistent underperformance and change providers where necessary.

The industry should also consider consolidation through large, member-owned umbrella funds. Such funds could combine economies of scale and lower unit costs with an ownership model in which efficiencies are retained for members’ benefit. This would still require an independent and skilled board, transparent procurement, competitive service provision and meaningful member and employer representation. It could provide a credible consolidation path for smaller and subscale funds while improving alignment between purpose and member value.

Third, costs should be standardised, comparable and expressed in terms that members can connect to their eventual retirement income. Low-cost default pathways should extend across the full retirement lifecycle, including the transition from saving to drawing a retirement income.

Fourth, financial guidance must become a lifelong service rather than an intervention shortly before retirement. Members need support throughout life’s key financial transitions, from entering the workforce to retirement. Technology can provide scale and personalisation, but should complement rather than replace human judgement and empathy.

Fifth, South Africa should develop more effective preservation and portability infrastructure. A retirement-fund clearing house could help members consolidate savings as they move between employers and funds. At each job change, preservation and consolidation should be easier than fragmentation and withdrawal.

Sixth, the industry should explore collective defined contribution arrangements, which can pool investment and longevity risks across members and potentially provide more stable retirement-income outcomes than purely individualised arrangements.

From activity to outcomes

Sustainability must be measured in people’s lives, not only on institutional balance sheets.

Retirement-industry scorecards should reflect the proportion of members on track for adequate retirement incomes, effective contribution rates, preservation at job changes, the effect of costs on projected income, gaps between different member groups and resilience against longevity and healthcare risks.

What the industry chooses to measure signals what it is prepared to manage.

South Africa’s retirement surveys are therefore both a pause and a concern. A pause because responsible stewards must test whether their confidence is supported by members’ realities. A concern because different studies continue to reach a similar conclusion: structural and regulatory progress has moved faster than retirement outcomes.

But they are also an invitation. The next generation of surveys should do more than provide new numbers. They should show that the industry listened - and acted.

Thinking beyond tomorrow means building a retirement system worthy of the generations that will inherit it. Caring beyond tomorrow means ensuring that the system is not merely sustainable on paper, but in the lives of the people it exists to serve.

That is the future South Africa’s retirement industry must collectively build.