South Africa’s retirement savings gap leaves millions exposed as old age approaches

South Africa's retirement savings gap leaves millions facing an uncertain financial future.

South Africa ranks 51st out of 55 countries for retirement provision, with voluntary workplace schemes and mounting household pressures leaving millions without adequate savings.

South Africa's retirement industry boasts substantial pension assets, established private funds and a well-developed regulatory framework. Yet these strengths mask a significant weakness: millions of people are reaching their working years without access to formal retirement savings.

The scale of the problem is reflected in the country's performance in the 2026 Marsh CFA Institute Global Pension Index, where South Africa ranked 51st among 55 countries, highlighting the challenges facing a system that still excludes large sections of the population.

Belinda Sullivan, head of Corporate Consulting Strategy at Alexforbes, says one of the biggest obstacles is the limited reach of occupational retirement funds. Unlike some countries, South Africa does not require employers to provide retirement funding arrangements for their employees.

“Voluntary is key because there’s no obligation on an employer in South Africa to provide retirement funding arrangements for their employees,” Sullivan said during the index briefing.

The voluntary nature of occupational retirement schemes means that access to workplace savings often depends on whether an employer offers a fund in the first place.

Sullivan says only 58.1% of formally employed South Africans participate in occupational pension or provident funds, leaving a substantial proportion without this form of retirement provision.

She believes compulsory participation or automatic enrolment could help close the gap, while also highlighting the need to extend retirement provision to informal workers, self-employed people and those earning irregular incomes.

However, broader public support for people who fall outside occupational retirement schemes will remain important, she says.

South Africa received an overall score of 50.4 in the 2026 Marsh CFA Institute Global Pension Index, down from 51 in 2025. This placed the country in 51st position, with an overall C grade.

Its weakest performance was in adequacy, where it scored 37.3 to rank 54th out of 55 countries. The sustainability score was 47.8, placing it 39th, while integrity was the strongest component at 75, although this still left South Africa in 36th position.

The index evaluates retirement systems across three pillars. Adequacy measures the benefits provided to members, sustainability considers whether a system can continue delivering those benefits, while integrity assesses regulation, governance and protection for members.

South Africa received a D grade for both adequacy and sustainability, compared with a B+ for integrity.

The report acknowledges the country's relatively strong pension assets in relation to gross domestic product, as well as its regulatory framework, governance standards and protections and communication requirements for fund members.

Sullivan similarly describes the local retirement industry as having substantial funded assets and sound pension regulation, with funds generally well managed from a governance perspective.

However, the index identifies several areas requiring improvement, including increasing minimum support for the poorest older people, expanding occupational retirement fund coverage, introducing minimum mandatory contributions and improving household savings.

Increasing labour force participation among older people as life expectancy rises is another potential area for improvement.

The challenges extend beyond access to workplace retirement funds, with many households struggling to put money aside while dealing with immediate financial demands.

FinMark Trust's 2025 FinScope survey found that just 10% of South African adults have a retirement product, while 86% of economically active adults – approximately 25.2 million people – have no retirement provision.

Jabulani Khumalo, senior data and analytics specialist at FinMark Trust, says the findings reflect the difficult financial decisions many South Africans face as they attempt to balance immediate needs against long-term security.

“The 2025 FinScope survey reveals that South Africans are making difficult financial trade-offs every day. While many are using available financial tools to cope with immediate pressures, the decline in savings and retirement preparedness highlights the urgent need for financial solutions that strengthen resilience and support long-term financial well-being,” Khumalo says.

Affordability is also a major obstacle among people who have not made retirement plans. The 2026 FNB Retirement Insights Survey found that 53% of respondents under 60 without a retirement plan said they could not afford to save because their disposable income was being spent elsewhere.

A further 24% said they did not know where to access savings and investment products, up from 13% in 2025.

However, the FNB survey also found an improvement in retirement planning, with 73% of South Africans under 60 reporting that they had a retirement plan, compared with 60% in 2025.

Plan ownership among lower-income consumers increased from 19% to 48% over the same period.

The figures from the two surveys measure different things: FinScope looks at ownership of retirement products, while FNB measures whether respondents have a retirement plan.

Financial pressures do not necessarily ease once people leave the workforce. FNB's research highlights how living costs, healthcare expenses and family responsibilities can place unexpected demands on retirement savings.

Among retirees in FNB's Personal segment, 74% said the cost of living had been higher than they anticipated. Meanwhile, 46% reported that healthcare costs were significantly more than they had planned for.

Family commitments were another source of unexpected financial pressure. The survey found that 51% of over-60s in FNB's Personal Banking segment and 47% in its Private Banking segment had been surprised by the financial implications of family responsibilities.

Sizwe Nxedlana, CEO of FNB Private Banking and Wealth Management, says retirement planning needs to account for the realities people face rather than relying on assumptions about what life after work will look like.

“Retirement is often imagined as a time of independence, freedom and fewer obligations, but the survey findings show that the reality of retirement is often more complicated. Rising food prices, medical aid, insurance, family support and unexpected costs can reshape even a carefully considered retirement plan,” Nxedlana says.

Sullivan says automatic enrolment, which signs employees up for retirement funding by default, could help increase participation in workplace schemes.

Another option is auto-escalation, which gradually increases the proportion of income employees contribute towards retirement savings over time.

However, she cautions that any such measures would need to account for affordability, while also addressing the difficulties faced by freelancers, informal workers and people running their own businesses.

The Marsh CFA Institute Global Pension Index similarly points to broader occupational pension coverage, higher contributions and stronger support for poorer older people as key areas where South Africa could strengthen its retirement system.

The challenge is not simply to improve the performance of existing pension funds, but to ensure that more people have an opportunity to participate in the system before they reach retirement age.