Retirement funds are institutions of the future. The contributions made today must ultimately provide for people decades from now, while the investment decisions made along the way can shape economies, communities and livelihoods.

Their responsibility therefore extends far beyond the next quarter, financial year or investment cycle to generations of members they may never meet.

That responsibility is captured in two ideas that increasingly shape how we view our role as a retirement fund: Beyond Tomorrow, which defines the horizon we need to think towards, and Caring Beyond Tomorrow, which gives that long-term perspective its human purpose.

Thinking beyond tomorrow means taking an intergenerational view. Caring beyond tomorrow means remembering what sits behind every contribution, investment return and pension: a person, a household and a story of work, sacrifice, family and dignity. But if we are building for generations we may never meet, we also need to confront the reality facing members today.

The retirement we are promising

South Africa has built a sophisticated retirement industry, supported by professional expertise, substantial pools of capital and an increasingly developed regulatory framework. Governance and disclosure have improved. Default regulations have strengthened the system, occupational and umbrella funds have broadened access, and the two-pot system seeks to balance preservation with immediate financial pressure.

These are important advances.

But regulatory progress is not the same as improved retirement outcomes.

The real test is whether more South Africans reach retirement financially secure, and whether tomorrow’s members will fare better than today’s.

The evidence suggests there is still a substantial gap between the retirement system we have built and the outcomes many members are likely to experience.

The Sanlam Benchmark Survey has provided long-term evidence that the average South African income replacement ratio is around 25%, compared with the often-cited aspiration of 75%. Just SA has identified a substantial gap between median retirement savings and the amount required to support retirement.

The Mercer CFA Institute Global Pension Index places this domestic evidence in an international context. While South Africa performs relatively well in areas such as integrity, adequacy remains the weakest component of the country’s retirement system.

The surveys differ in methodology, sample and perspective. But when different sources repeatedly point towards similar shortcomings, the findings become a systemic signal rather than statistical noise.

And the consequences are deeply human.

A retired teacher, nurse, artisan or administrator living on a quarter of their former income may face choices between food, electricity and healthcare. Adult children may find themselves supporting ageing parents while raising their own children.

The retirement deficit therefore does not remain an individual problem. It can migrate into families, communities, employers and the state.

Why the gap persists

There is no single reason for inadequate retirement outcomes.

Too few people participate in formal retirement arrangements. Many who do participate do not contribute enough or for long enough. Interrupted careers, unemployment and informal or non-standard work weaken contribution histories.

Preservation is another challenge.

Members may understand that withdrawing retirement savings today reduces what will be available tomorrow. But when people are dealing with debt, unemployment or household emergencies, the present can be more urgent than the future.

If the problem were simply a lack of knowledge, financial education could solve it. But people cannot be educated out of hunger, debt or distress. This is why the two-pot system is a thoughtful response to real financial pressures. It protects a portion of retirement savings while allowing controlled access to another portion. But its long-term effects need to be monitored. Repeated withdrawals and job changes could leave members with fragmented, smaller balances across different administrators, with ongoing costs attached.

Costs, governance and incentives are similarly interconnected. Pricing has improved in parts of the market, particularly in umbrella funds. But lower fees will not improve outcomes if they are offset by declining contributions or absorbed elsewhere.

The central challenge is the distance that can exist between institutional intention and members’ lived outcomes.

Building for the member's journey

Closing that gap requires reform that follows the member throughout their working life.

Retirement participation needs to extend beyond traditional formal employment. Auto-enrolment or strongly defaulted participation using existing tax and payroll infrastructure could help broaden participation, alongside approaches that accommodate non-standard and gig workers.

There also needs to be an honest national conversation about contribution levels. It is not enough to participate; members need to contribute enough, and for long enough, to support an adequate retirement.

Umbrella-fund governance should continue to strengthen around demonstrably independent, member-centred oversight. Trustees and governance structures need to test service arrangements, demand transparent value, address underperformance and be prepared to change providers.

There may also be a case for consolidation through large, member-owned umbrella funds. Scale can lower unit costs and retain efficiencies for members, particularly where smaller funds struggle to achieve those benefits.

But scale does not guarantee good governance. Consolidation still requires an independent and skilled board, transparent procurement, competitive service provision and meaningful member and employer representation.

Costs should also become easier for members to understand and compare, including their eventual effect on retirement income. Low-cost defaults should apply across the lifecycle, including the transition from saving to drawing retirement income.

Financial guidance should become a lifelong service rather than something offered primarily before retirement. Members need relevant guidance when they enter employment, receive a promotion, marry, have children, face retrenchment or divorce, change jobs and eventually retire.

Technology can help provide guidance at scale and with greater personalisation, but it should complement rather than replace human judgement and empathy.

Preservation and portability infrastructure also needs attention. A retirement-fund clearing house could help members locate and consolidate savings accumulated across different jobs and funds. At each job change, preservation and consolidation should be easier than fragmentation or withdrawal.

We should also continue exploring collective defined contribution models. These do not recreate a guaranteed defined-benefit arrangement, but can pool investment and longevity risks and may provide more stable retirement-income outcomes than purely individualised arrangements.

A system worthy of the future

Ultimately, the industry needs to shift from measuring activity to measuring outcomes.

A sustainable retirement system cannot be judged only by assets under management, investment performance, compliance or governance structures. It must also consider whether members are on track for an adequate retirement.

That means looking at the percentage of members on track for adequate retirement, effective contribution rates, preservation at job changes, the effect of costs on projected income, gaps between member groups, and resilience to longevity and healthcare risks.

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

The surveys and benchmarks showing inadequate retirement outcomes should therefore be viewed as more than criticism. They are a pause, a concern and an invitation to act.

The next generation should not simply provide newer numbers. It should show that the industry heard the findings of the past and acted on them. Because the retirement system we build today will be experienced by people we may never meet.

Thinking beyond tomorrow means building a retirement system worthy of the generations that inherit it.

Caring beyond tomorrow means ensuring that the system is sustainable not just on paper, but in the lives of the people it serves.

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