Retirement funds are stronger, but members still risk reaching old age without enough help

South Africa’s retirement fund industry has changed dramatically over the past 20 years. There are fewer funds, stronger governance structures, greater participation in umbrella funds, and a far more regulated system. Assets under management have grown significantly, and the two-pot retirement system has forced members to pay closer attention to their retirement savings than in years past.

However, a stronger retirement industry is still not enough if members are left to make life-changing retirement decisions too late, with too little advice and too little understanding of the long-term effects.

That is one of the key themes emerging from the 45th Sanlam Benchmark Survey, released this week.

The 2026 Sanlam Benchmark surveyed 76 stand-alone funds, 130 umbrella fund employers, 30 pensioners who retired four to five years ago, and 600 consumers who are nearing or in retirement.

Anna Siwiak, the head of product development at Sanlam Umbrella Solutions, says the pension fund environment has changed from a slow-moving, rules-based system into a more dynamic, highly regulated one.

The scale of that change is clear in the numbers.

In 2006, the Benchmark surveyed 160 stand-alone funds and only 19 umbrella funds. By 2016, it surveyed 100 of each. In 2026, it surveyed 76 stand-alone funds and 130 umbrella fund participants.

Over the same period, the number of registered funds in South Africa fell sharply. In 2006, there were about 13,000 registered funds, with just over 4,000 active funds. Today, there are just over 4,000 registered funds, with only 837 active funds.

“This contraction is certainly not a sign of decline, however — quite the opposite,” says Siwiak.

Assets under management in the retirement fund industry have grown almost fourfold, from about R1.5-trillion to R5.84-trillion.

The move towards fewer, larger funds also reflects the continued growth of umbrella funds, which have become a more common retirement savings vehicle for employers.

Siwiak says the industry’s path has not been random.

“Taken together, the past two decades reflect an industry that has evolved with clear direction towards greater consolidation, improved governance and cost-efficiency, and a stronger member protection,” she says.

The harder question

This is the good news. The harder question is whether structural progress has translated into better retirement outcomes for members.

Brian Karidza, head of actuarial and benefit administration services at the Government Employees Pension Fund (GEPF), says retirement outcomes should not be viewed only as the amount paid to a member at retirement. They include the full member journey, from the first contribution to the point at which a person starts receiving retirement income.

“You should never get to a point where you reach retirement, and you’re surprised by your outcome, because that just means that we have not served you well enough to understand your outcomes,” says Karidza.

This is where the gap lies.

Funds may be better governed, and the industry may be more consolidated, but many members are still engaging too late, receiving advice too late and making major decisions without fully understanding the consequences.

The Benchmark found that South Africans believe retirement planning should begin around age 35. In reality, retirement fund members only start engaging with their retirement fund 3.4 years before stopping work, and seek financial advice, on average, just 20 months before retirement.

Karidza says the industry is doing a lot of communication and education, but is still not meeting the goal of changing outcomes.

“Our advice is coming too late. We should be getting them early whilst they’re still entering the system,” he says.

He says it is no longer enough to measure success by processes alone. The industry needs to look at whether members actually end up with better retirement outcomes.

“We should move from preservation messaging to resilience design, as well as moving from just compliance and focusing on processes, to looking at what the real outcomes are. Better outcomes require realistic design,” says Karidza.

He proposes that the industry should move from product communication to decision support, from late advice to life-stage guidance, and from generic advice to more structured and individualised support at different points in a person’s career.

Two-pot system

The two-pot retirement system has created one important shift: engagement.

According to the Benchmark, 84% of stand-alone funds and 80% of umbrella funds report increased member engagement since the two-pot system was implemented.

That means more people are looking at their retirement savings, asking questions and trying to understand how the system works. But engagement triggered by access to money is not the same as long-term retirement planning.

Siwiak says this is the next challenge.

“People are paying more attention to their retirement savings than they have in years. Our challenge now is to help them use those moments of engagement to make better long-term decisions, not only when they need to access money, but throughout their working lives,” she says.

The system also faces a new fragmentation risk.

Siwiak notes that members who change jobs may leave small retirement pots behind at different providers as they move through their working lives. Some of those pots are very small and could be eroded by fees over time.

“This fragmentation opens up some risks,” she says. “This is why advice is going to be so critical in the years coming forward.”

The contribution numbers also show why advice alone cannot solve the whole problem.

Average contributions in umbrella funds currently sit at 14.09% of pensionable salary, compared with 17.44% in stand-alone funds. Both are well below the maximum tax-deductible contribution level of 27.5% of taxable income.

Few people can immediately increase their contributions to that level. However, the Benchmark points out that gradually increasing retirement contributions by one or two percentage points as salaries grow can make a meaningful difference over time.

The obstacle is affordability.

For many employers and employees, contribution levels are shaped by cost pressures. Umbrella funds may offer governance and cost benefits, but Siwiak notes that affordability pressures and employer cost sensitivity are influencing contribution rates.

Kanyisa Mkhize, chief executive officer of Sanlam Corporate, says retirement confidence is not built in the final years before retirement. It is built through decades of decisions, including preserving savings, increasing contributions where possible and managing debt.

“The Sanlam Benchmark tells us that people understand when they should start planning, but the reality is that many are making retirement decisions in a very difficult economic environment,” says Mkhize.

The system has made real progress. There are fewer funds, better governance structures, higher assets under management and stronger regulatory guardrails.

But the next phase may be harder than the last.

The retirement industry has spent two decades building a stronger machine. Now it needs to make sure ordinary members know how to use it before they reach the point where the machine can no longer save them. DM