Retirement provision is quietly but steadily undergoing significant changes which are driven by changing tax structures, Aids, demands of members and technology.
This is the conclusion of the Sanlam biennial retirement benefits survey.
Chris Bösenberg, Sanlam's chief consultant on group benefits, said trends showed that members and pensioners could expect a fairer deal. The trends in the survey of 431 retirement funds included:
* A "most pleasing trend" was a better deal for people already on pension, with an increasing number of funds catering for the ravages of inflation with annual pension increases. For the past four years pensioners have been receiving, on average, increases greater than the inflation rate as against earlier years when pensions were below the inflation rate year after year;
* About 10 percent of funds no longer guaranteed a member's pension for a period of five years;
* Defined contribution funds paid better withdrawal benefits on a member leaving for reasons such as retrenchment or resignation. The interest rate credited to a member and the portion of the employer's contributions paid to a member had increased but the majority of funds still paid low interest rates;
* The shortening of the final salary average to 1,88 years for determining pension benefits;
* An increasing, but still low-level, inclusion of fringe benefits into earnings to provide higher pensions;
* About one third of employers, who provided defined benefit funds, now also gave members the option of joining a provident fund. About 43 percent of companies were considering establishing defined contribution funds;
* Only 40 percent of companies had a formal Aids policy and only 37 percent had an Aids education programme in spite of the threat of the disease;
* About 20 percent of funds exceeded the 15 percent of pensionable income limit to retirement contributions proposed by the Katz Commission but contribution rates by members and employers had come down;
* Discrimination was being reduced. Average retirement age for men 10 years ago was 64,3 years and for women 62,3. It was now 63,9 for men and 63,3 for women;
* The reduction in benefits by about 0,25 percent a year on early retirement had remained constant but larger increases were given for late retirement.