Alexander Forbes reports low retirement projections for members

Only 10% of members in retirement funds managed by Alexander Forbes are currently on track to replace three-quarters of their final pensionable salary, BusinessTech reported, underscoring an acute savings shortfall as household budgets face intense pressure from economic stagnation, high unemployment, and soaring transport and energy costs.

The latest Member Insights report from Alexander Forbes reveals that while the share of workers on track to meet the 75% replacement ratio has risen from 6% in 2021, nine out of ten contributing members still fall short of that goal. Vickie Lange, head of solutions enhancement at the firm, noted during an online briefing that contributors currently average a projected replacement ratio of only 46%, improving marginally from 40% five years ago.

The survey examined more than 1.1 million active contributing member records across over 310 retirement funds and 2,300 employers. Data shows that individuals must dedicate 15% of their salary toward retirement savings for 40 years to achieve the target replacement ratio, whereas the actual average contribution rate sits at 11.2%.

Economic Strain Triggers Early Savings Withdrawals

South African households continue to battle weak economic growth and high joblessness. The International Monetary Fund projects the nation’s economy to expand by just 1.1% this year, trailing the 3.1% global and 4.5% sub-Saharan averages, while more than a third of the workforce remains unemployed. This persistent financial strain has driven workers to utilize a two-pot retirement system launched in September 2024 that permits early withdrawals from a portion of their savings. Lange stated that the administrator has paid out approximately R17 billion under that arrangement.

At the same time, high living costs extend to transportation, where fuel prices have breached the R30-per-litre threshold. Mineral Resources and Petroleum Minister Gwede Mantashe addressed the fuel price crisis at the Joburg Indaba, as reported by Polity.org.za, attributing the surging costs to the war in the Middle East and urging citizens to work together rather than view state price cushioning as an absolute entitlement. In the automotive market, Getaway Magazine reported that record fuel costs have accelerated interest in alternative transport, with new-energy vehicle sales growing 53% year-on-year to 7,065 units between January and April 2026, alongside surging demand for affordable electric models from Chinese manufacturers such as Chery and BYD.

Retirement Age Adjustments Influence Income Projections

Working longer offers a substantial cushion against the projected savings shortfall. Although policy allows retirement at age 65, most members choose to exit the workforce as early as age 61. Lange explained that the expected replacement ratio sits at 45% for a normal retirement age of 60, but climbs to 68% for those who delay departure by five years to age 65. Organisation for Economic Co-operation and Development data indicates that the average South African can expect to receive just 17% of their working salary in retirement, a stark contrast to international counterparts such as Brazil at 96% and Turkey at 84%.

More on this story: Two-Pot System: Lower-Income Members Lead Retirement Withdrawals