Key Highlights – Sanlam Survey

Executive Summary

Sanlam employee benefits embarks on an annual retirement fund survey, which provides useful insight into trends within the South African retirement fund industry.

The survey booklet is 40 pages in length and for your benefit we have summarised some of the key points for your review. Should you wish to review the full survey, the data and the research findings they are freely available on

Please note that our summary has focused on the umbrella funds section only.

If you have any questions with regard to our summary or the detailed findings we would be happy to answer them for you.

J Armstrong signature
John Armstrong
Managing Director


Key Highlights

  1. Contributions

    • 64% of employers indicated that their remuneration packages are based on total cost to company package.
    • The average employee contribution is 5.6%.
    • The average employer contribution is 8.5%.
    • 41% of funds allow members to select their own contribution level.
    • The average administration cost is 0.8% of salary.
  2. Advice

    • 52% of the respondents indicated that their consultant was independent of the fund sponsor.
    • 69% of funds have a formalised strategy for rendering advice to members.
  3. Investments

    • Member - directed Investment choice
    • 98% indicated that there was an appropriate default strategy for members.
    • 70% is the average proportion of members who rely on the default strategy.
    • 53% of respondents utilised a life stages strategy (the most popular option).
  4. Replacement Ratio

    1. On average employers expect 26% (2013: 18%) of their members to retire comfortably. The funds were asked their opinion on the replacement ratio that would be needed on different salary bands. Their responses are shown below:


      10k - 25k


      For Survival

      65% (2013: 64%)

      61% (2013: 59%)

      57% (2013: 57%)

      To maintain current living Standards

      77% (2013:76%)

      76% (2013: 73%)

      73% (2013: 73%)

      To live beyond current living standards

      81% (2013: 86%)

      81% (2013: 85%)

      79% (2013: 85%)

  5. Life Stage investing

    • In a life stage vehicle members are switched to less volatile portfolios in the period prior to normal retirement age, called the phase out period. The most popular phase out periods are 5 years (43% of respondents) and 6 - 7 years (28% of respondents). The majority of life stage models have more than three end stages and the most common type of annuities that the end stage allows for is, living annuities 53% (2013: 57%), inflation linked annuities 47% (2013: 51%) and guaranteed annuities (level or increasing) 53% (2013: 46%). The most popular asset allocation in the end stage is conservative equity 53% (2013:37%) and 100% cash 34% (2013: 27%). 91% (2013: 86%) of respondents indicated that members received advice when they enter the phase out period of the life stage model.
    • Risk Benefits
      • 68% of employers provide risk benefits as part of the umbrella package.
      • Average death benefit is 3.1 times.
      • Most common level of funeral cover is R 10 000.00.
  6. Communication

    • The majority of member communication is delivered via printed material, followed by technology and face to face which is consistent with the 2013 and 2011 results.
    • Investment performance 87% (2013: 89%) and the benefit structure 87% (2013: 83%) are still the most popular topics communicated.
    • 61% (2013:59%) of umbrella funds communicate legislative changes to their members.
    • The most popular method of distribution is electronic member newsletters followed by paper based member newsletters and emails.
    • The majority of members' retirement fund related queries are handled by their Human Resources department 56% (2013: 66%), the retirement fund consult / broker 50% (2013: 53%), and the administrator 50% (2013: 46%).
    • 77% (2013: 78%) of funds make use of an internet/intranet facility.
  7. Retirement

    • 42% of employers provide members with access to a Net Replacement Ratio (NRR) or similar calculator, while a further 45% of employers provide each member with an NRR statement each year/ regularly.
    • 20% of respondents indicated that the Trustees or employer monitors NRR per member on a regular basis.
    • 11% of employers do not have a NRR or similar calculator.
    • 78% (2013: 70%) of employers are concerned about how members utilize their retirement benefits, and 86% (2013: 820%) of employers do not want to have further involvement with members after retirement.
    • The following are indicated as the biggest mistakes that members make when saving for retirement:
      • 78% Member apathy, i.e. not taking retirement planning seriously or leaving it too late to start saving for retirement.
      • 70% Not preserving retirement benefits and therefore having too little investment or insufficient time to save for retirement.
      • 44% Low levels of contribution rates in retirement savings.
  8. Advice to Members

    • For members of retirement funds, decision making about their retirement starts when they join a fund. Last year, Sanlam included a set of questions relating to the process which retirement members go through when they join a fund.
    • Results from this year's research again show that retirement fund members are not given sufficient opportunity to obtain professional advice when they make financial decisions. When asked how much time they were given to take these decisions, half of the members indicated that they were required to complete their retirement forms within a day or two.
      • 90% of members made their decisions and completed their forms within a week of receiving them.
      • Most retirement fund members did not have sufficient opportunity to get financial advice.
  9. Members do not review their financial decisions

    • Critically, Sanlam's research shows that 90% of retirement fund members do not reassess their choices after making their initial decisions, i.e. review their decisions with a professional. Despite the fact that so few members reassess their choices, one third indicated that they were happy with their initial choices.
    • Retirement fund members still prefer to speak to a qualified professional for advice about their decisions.
    • More than 50% prefer face-to-face interaction for the initial engagement and when they were about to withdraw or transfer to another fund.
    • Most retirement members obtain professional advice 10.8 years before retirement.
    • More than 25% said they would seek advice less than 5 years before retirement.
    • Retirement members see advice applying more to the decisions at retirement rather than the period leading up to the retirement.
    • 40% of members want advice on how to invest and how to prepare for retirement.
  10. Where do members go for help about retirement fund matters?

When asked about their first point of contact for advice, two thirds of members indicated they would contact their human resources (HR) officer. This number has increased from last year's survey where half the members indicated they would contact their HR officer. Only 14% of retirement fund members contact a personal financial advisor or broker for advice and assistance.

Shifting the time frame to retirement, almost half of retirement fund members indicated that at this point, they would seek financial advice from a human resources officer.

Summary by Royal Union FInancial Services from


Contact Details

If you would like more information, or to arrange an appointment, please contact us:

Telephone: 031 717 2700

Fax: 031 717 2701

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Postal Address: PO Box 68, Kloof, 3640