Sanlam recently published the results of its annual survey. 100 principal officers of stand-alone retirement funds were interviewed for this purpose. Here are some of the more interesting findings of this survey in respect of stand-alone funds:

• SA treasury proposed that funds put default annuities in place for fund members. 90% of trustees are in favour of default annuities being offered by their fund.
• The average employer contribution rate (non-unionised funds) for medium sized funds (501 – 5000 members) is 10.27% (9.7% is allocated towards retirement and 3.6% towards costs);
• The average member contribution rate (non-unionised funds) for medium sized funds (501 – 5000 members) is 6.52%;
• The average cost structure is as follows –
  • Death benefits cost 1.6%, cover is 3.4 times annual salary, less than 20% of funds offer dependants’ pensions, only 16% offer flexible risk benefits;
  • Disability benefits cost 1%, cover is 2.4 times annual salary but mostly in the form of an income benefit;
  • Administration and operating costs are 1% (63% of funds allow for additional billing).
  • More funds apply a fixed cost per member to recoup admin fees, the cost of member choice on average is R 2.75 per member per month;
• Normal retirement age is 62;
• Targeted net replacement ratio is typically set at 70% of pre-retirement income.
• More funds have implemented default investment strategies, 44% of these have a life stage strategy, the less volatile phase starting between 5 and 6 years before retirement (this has decreased from 6.1 years);
• Average age of starting to work is 22, yet contributions only start at 26;
• 50% of funds have a formalised strategy for rendering financial advice;
• 54% of funds are considering to transfer to an umbrella fund;
• One in 5 pensioners supplements his retirement income with part-time work, mostly out of necessity;
• 38% of pensioners deplete their retirement lump sum early on in retirement, on average within 2.4 years after retirement.