As a young legal and tax advisor entering the financial planning industry in 1987, the lament of poor retirement planning by the vast majority of South Africans was rooted and unyielding.

Current statistics showing the incredibly low number of financially-independent retirees (between 6% to 10%) proves that retirement planning is still not a priority for many South Africans, beyond any doubt. So, nearly 30 years later, the words are the same, although the tune may have a changed a little.

Looking at the strategy employed by many leading role players in the financial services industry reminds me of the well-known adage ‘you may be insane if you keep doing the same thing expecting a different result’.

A quick backward glance shows that in 1987, the Organization for Economic Cooperation and Development’s definition of unemployment put the unemployment rate in South Africa at 16.5%. With unemployment in 2016 at a rate of over 26%, it is quite clear that a pending retirement disaster is looming.

The loss of time to plan for and accumulate capital for your retirement is quite disastrous given the power of compounding. For example, to generate R1 million over 20 years, using 10% annual growth as a benchmark, will require a monthly saving of R1 316 while having, say, only 15 years to do so will require a savings of R 2 413 each month. Time is really, in this case, money.

Given the tax and cost benefits of investing in a retirement annuity, why is it not a ‘no brainer’ as a savings option for millennials?

What are possible solutions to incentivising this retirement savings option, especially for the younger generation?

‘Grey-haired couple sailing into the sunset’

I am convinced that the current advertising does not appeal to the young, who, by all accounts, are seeking immediate gratification rather than saving for their twilight years. I would be very happy to concede that I am incorrect should the marketing gurus provide information to the contrary. Being rather pragmatic by nature, my deduction is based on looking at the advertising efforts over the years and seeing no real improvement in the retirement statistic.

After all is said and done, should retirement planning not start early and become a way of life to avoid the problem at pensionable age? Should advertisements then be targeting the younger investors?

 Is there no app for this?

Over weekends, especially those straddling payday, the length of the queue of people at the Lotto machines, willing to gamble away their hard-earned cash, is surely the envy of many a business owner. Why not have a retirement annuity point of sale willing to take a R10 or R20 contribution there and then from a willing investor, with his ever-present bar coded RSA ID and issue the willing investor with his or her tax certificate? If the contribution is not tax deductible at payment then it will be added to the tax-free portion at retirement.

Any financial planner will tell you that finalising an application form for a retirement annuity, for submission with all the legislated compliance and internal procedural requirements, is an exercise that brings tears to the eyes of many.

Surely the benefits of an investment in a retirement annuity with all its own South African Tax Revenue Service (Sars) directives, information and taxable consequences is sufficient ground to relax the majority of compliance requirements? Of course, this is other than the non-negotiable (to my mind) obligation to inform the client of commissions, fees and other costs – as well as the fact that the funds so invested are for a prescribed period and only accessible subject to certain terms and conditions.

The cry of cost inefficiencies is already ringing in my ears, but someone will find a way to meet this challenge – of that I am certain.

Accessibility

Life is not predictable: unemployment, divorce, emigration and other issues do not only happen to the person next door. A young retirement annuity investor may well be hesitant to lock away his cash until he/she turns 55 – a very long time away for any young person. But imagine if he/she could get a tax break for investing and still have access to his funds in the event of an emergency – even if there are tax penalties to be paid upon withdrawal for whatever reason? Alternatively, given the instant society we live in, certain ‘loyalty benefits’ could be made available to the investor over certain set time frames.

How is this going to be made possible? Don’t ask me! After all I am only an old-school financial planner without a huge tech aptitude (or budget).

Advocate Thayn Niemand CFP®, is with Verso-Wealth