Only one in ten members of retirement funds run by Alexforbes, South Africa’s largest standalone fund administrator, is on track to replace three-quarters of their final salary when they stop working, highlighting a deep savings shortfall in the country.
According to the group’s Member Insights report, the share of contributing members on track to reach a 75% replacement ratio has improved to 10%, from 6% in 2021. The average projected replacement ratio, which measures retirement income as a share of final pensionable salary, is 46%, up from 40% five years ago.
Vickie Lange, head of solutions enhancement at Alexforbes, told an online briefing on Wednesday that nine out of ten contributing members were still not on track and that considerable work remained.
Retirement Readiness of Alexforbes Fund Members
| Measure | Figure |
| Members on track for 75% replacement | 10% (6% in 2021) |
| Average projected replacement ratio | 46% (40% five years ago) |
| Average contribution rate | 11.2% of salary |
| Contribution needed for 75% ratio | 15% for 40 years |
| Average actual retirement age | 61 |
| Two-pot withdrawals paid by Alexforbes | About R17bn |
Source: Alexforbes Member Insights report
The report, based on more than 1.1 million active member records across over 310 funds and 2,300 employers, found that members would need to save 15% of their salary for 40 years to reach a 75% replacement ratio. The average contribution rate is 11.2%.
Retirement age is another factor. Although many funds set retirement at 65, most members leave at about 61. Lange said a member retiring at a normal retirement age of 60 could expect a replacement ratio of 45%, rising to 68% if they worked five more years to 65.
Financial pressure on households is also eroding savings. Since the two-pot retirement system took effect in September 2024, members have been able to withdraw part of their savings before retirement. Alexforbes has paid out about R17 billion under the system, Lange said.
The findings come against a weak economic backdrop. The International Monetary Fund expects South Africa’s economy to grow by just 1.1% this year, below the global average of 3.1% and the sub-Saharan African average of 4.5%. About 8.5 million people, more than a third of the labour force, are unemployed, and the official unemployment rate rose to 33.6% in the second quarter.
International comparisons show the scale of the gap. Data from the Organisation for Economic Co-operation and Development indicate that the average South African can expect a retirement income of about 17% of their working salary, compared with 96% in Brazil and 84% in Turkey. Unlike those countries, South Africa has no mandatory earnings-related state pension, relying instead on voluntary or employer-based funds and a means-tested older persons’ grant.
Government has long discussed reforms to retirement savings, including mandatory preservation of savings when workers change jobs and a possible national social security fund. The two-pot system, which places two-thirds of new contributions in a retirement pot that cannot be accessed until retirement, was designed partly to improve preservation while giving members limited access to cash in emergencies.
Industry analysts say the combination of low contributions, early withdrawals and early retirement leaves many South Africans dependent on family support or state grants in old age.