A nation unprepared for tomorrow

Kabelo Adamson
Only 10 percent of the population covered by pension funds

Perhaps they are too busy living in the moment, splashing the cash like there’s no tomorrow; or maybe they simple can’t afford to sign up, with every Thebe already set aside just to put food on the table.

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Either way, it seems the majority of Batswana are failing to save for life after work, with only 10 percent of the population covered by pension funds.

According to the Director Retirement Funds at Non-Bank Financial Institutions Regulatory Authority (NBFIRA), Bopelokgale Soko, only 280, 258 people are covered under the country’s various – there are 87 in total – pension funds.

“If you look at this number against the population, it means that only 10 percent is covered by the pension funds. The implication is that if when using today’s numbers, it means that when the people retire, 90 percent of them would not be covered by the pension funds,” she highlighted, speaking at the launch of the Authority’s Annual Report this Tuesday

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Soko further revealed that almost 60 percent of the working population are not signed up to a pension fund.

She warned this creates a policy challenge as it means that when these workers retire, they will have to rely on the government’s monthly P530 old-age pension.

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“The question is: will this be enough to give you a dignified post-retirement life that you would wish to have?” Soko asked, strongly hinting that the answer is no!

She explained the reason why so few people join a pension fund is because signing up is voluntary and most simply choose not to.

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“The other thing is that most of our pension funds are employer-based, and by employer-based we mean formal employment,” she added.

As of the end of March, there were 87 retirement funds in the country, a slight jump from the 82 registered at the same point last year.

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The increase was due to the licencing of six new standalone retirement funds and the transfer of one standalone retirement fund into a licenced umbrella fund.

According to the latest NBFIRA Annual Report, the retirement funds sector registered a decrease of 47 percent in total income from P11.8 billion reported in 2019 to P6.2 billion in 2020.

The drop is said to have been caused mainly by a fall in investment income from equities by 89 percent (from P7 billion to P777 million) during the same period.

The figures are based on the audited statements of the funds for the respective financial years and not for calendar year-end.

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