Abstract:
Continuous reforms of pension systems of countries of the world remain significant considering the fact that many countries, including South Africa, face challenges of how to adequately provide for their ageing populations. South Africa’s retirement system takes a formal three-pillar approach; comprising the state old-age pension, occupational funds, and private savings. Pension provision (occupational) takes the form of retirement funds which are mostly established by employers, administered by insurance companies, and regulated by the state through legislation. South Africa does not have a public fund and relies solely on the private retirement system. Many workers in South Africa retire with no income or with insufficient benefits and end up relying on the state for support. The reasons for this include a general lack of a culture of saving, the absence of a public fund, the voluntary nature of the system, leakages that exist within the system, a lack of mandatory preservation of benefits, risks with lump-sum cash payments, and the fact that the system focuses more on those in formal employment. This raises the question whether the system is in line with what is guaranteed by section 27 of the Constitution of the Republic of South Africa, 1996 that everyone has a right to have access to social security. The right guarantees “everyone” access to some form of income (protection) during retirement, which makes retirement provision an important social security component. Thus, pensions play an important social security role as they protect the elderly from falling into poverty. Benefits received from retirement savings serve as income replacement in retirement and should therefore receive adequate protection, and they must be able to provide adequate protection to the beneficiaries – beyond mere survival. Over the years South Africa has embarked on many reform processes to find ways to improve its retirement system. This study determines the adequacy of South Africa’s occupational retirement system along social security objectives. It describes the nature of the system, considers proposals made for reform purposes, examines international law, (including systems in Belgium, the Netherlands, and the United Kingdom for a comparative study), identifies weaknesses in the system, and makes some proposals to improve coverage and protection of benefits.
