Government Employees Pension Fund’s Post

Transcript

O in the white space is the formal sector, where I think other African countries like Kenya, like Nigeria, like Ghana have taken this step a lot quicker than us in terms of making it compulsory for formal sector employees to contribute to an approved retirement savings vehicle. But it's on the informal sector side where other African countries have got much larger informal sectors compared to South Africa. Where you really see that innovation coming through. And also what's interesting is that often it's the government there that's busy driving this change. They come up with the idea, they set up the initial vehicle, then they get the private sector involved. So it's also exciting is to see the the public private partnerships that are working in those other African countries. And I think that we also, we have examples of this working in South Africa and I think that we should also be trying to do that further. So in other African countries you have these micro pensions that have been set up and the micro pension. Designers is very similar to two parts. We're very excited in South Africa about two parts. But an actual fact for the informal sector, those sorts of products have existed before COVID, before the COVID pandemic hit. Those already existing in other countries where it would become automated. So the the longest example that's been around is when you buy airtime, so you buy credit for your cellphone, it's set up linked to a micro pension policy so that maybe 10% of what you purchasing is going through to those micro pension product and maybe 60% of that. Those inflow compulsory preservation pots, while 40 percent, 40% is going into an accessible pot where you can access it after a certain period of time. So you shopping, you needing to file your girlfriend or your wife, you're buying the 8th Army in the shop and you're not even realizing that you're saving at the same time. And often this has been set up through different associations of informal sector workers, market traders for example. They've negotiated something with the product to the private sector provider and so they've set it up in such a way that also cost effective for the individuals. The, So that's that default arrangement where you don't even think about it after six months to a year, you look back and you realise, ohh, wait, I've got some money in my accessible pot that I can now take and spend and go and buy something nice for my wife. And I don't even worry about the fact that I've got this compulsory preservation plot of 60% because I'm happy that's still there for my retirement. So I think we in South Africa, we should look into that example. Even though we've got a smaller informal sector, it's still large compared to other countries in the developed world. So we still have this opportunity to do more for our informal. Keep the workers. We've got a really good important state old age grant and a lot of the people depend on the state old age grant, but it's an opportunity for them to save more towards their retirement so that they can get more than just the state old age grant.