Voluntary household saving in South Africa : 2005 to 2017

Abstract

Research shows an inadequate saving culture among South Africans, including insufficient provision for retirement. This research focuses on voluntary household saving in South Africa, which is defined as household saving(s), excluding any amount (fully or partly) sponsored by either an employer or the state, with the aid of the multi-pillar retirement provision system recommended by the World Bank. Several saving theories are investigated to enable a qualitative or descriptive analysis to analyse household saving behaviour using both income statement (saving) and balance sheet (savings or net worth) approaches. Data is sourced from the national accounts, as well as two household surveys (the Income and Expenditure Survey and the Living Conditions Survey conducted by Statistics South Africa) and a longitudinal household panel study (the National Income Dynamics Study implemented by the Southern Africa Labour and Development Research Unit). The research questions centre on what households’ allocations and preferences related to voluntary saving(s) instruments in South Africa are, and how these have evolved over the period 2005 to 2017. The study finds that voluntary saving, as measured by both an income statement and balance sheet approach, contributes significantly to household saving(s) in South Africa and that the World Bank’s multi-pillar pension design system is highly relevant for the country and should be promoted by government. Recommendations include that more research should be done to construct a holistic view of all five of South Africa’s saving pillars, while the sections in the national accounts dealing with household saving, savings and the link between the two, should be revised and updated as soon as possible by the relevant authorities