Thousands of workers have cashed in R42-billion of their pensions over the last year.
This was revealed by one of the country's largest pension fund administrators, Alexander Forbes.
Its annual results for the year ended 31 March 2016, which were released yesterday, also highlight the negative consequences of companies retrenching workers.
The company's interim chief executive, Deon Viljoen, said according to statistics from their business division Investment Solutions, the ongoing monthly contributions were worth R27-billion while outflows were worth R42-billion per annum.
"These are not client losses. These are clients who are paying ongoing benefit payments for withdrawals, retrenchments and retirement or resignation where people do not preserve," he said.
He said the 46% of the outflows were preserved in the funds that were administered by Forbes.
"This is indicative of what is happening in the economy.
"When times are tough like this, our clients, even those that do not go through retrenchment programmes, are quite reluctant to hire," he said.
Viljoen said as Alexander Forbes generated income from monthly fees that each member is charged, which immediately has an immediate impact on both the administration and asset sides of the business because as people leave and they are not replaced, benefits payments flow out of the business.
The results showed that the number of stand-alone retirement funds has dropped to 328 in 2016 from 338 in 2012, while the number of active members has increased by 1029000 in 2016 from 855000 in 2012.
Titanium Capital analyst Charles Bole said: "The challenge is the space Alexander Forbes is in, which is going to make it difficult for the company to show strong growth, and I think the key drivers of their business, especially employment, are not in their favour."
Derrick Msibi, the managing director of Investment Solutions, said pension fund administrators were under pressure because big businesses were retrenching workers.
"Most people don't realise that large corporates in SA are on a major efficiency drive, which involves looking at head count and there is a general reduction around large corporates in terms of overall people they hire," said Msibi.
He said the manufacturing, mining and telecoms sectors were on a process to lay off workers.
"The growth in employment is coming from the public sector and small and medium enterprises, which tend to not have retirement provisions for their people.
"So we have not really benefited a lot from the growth in employment from medium size enterprises, which employ between 10 and 20 people," he said.
sibanyonim@sowetan.co.za
Workers cash R42bn in pensions
Thousands of workers have cashed in R42-billion of their pensions over the last year.
This was revealed by one of the country's largest pension fund administrators, Alexander Forbes.
Its annual results for the year ended 31 March 2016, which were released yesterday, also highlight the negative consequences of companies retrenching workers.
The company's interim chief executive, Deon Viljoen, said according to statistics from their business division Investment Solutions, the ongoing monthly contributions were worth R27-billion while outflows were worth R42-billion per annum.
"These are not client losses. These are clients who are paying ongoing benefit payments for withdrawals, retrenchments and retirement or resignation where people do not preserve," he said.
He said the 46% of the outflows were preserved in the funds that were administered by Forbes.
"This is indicative of what is happening in the economy.
"When times are tough like this, our clients, even those that do not go through retrenchment programmes, are quite reluctant to hire," he said.
Viljoen said as Alexander Forbes generated income from monthly fees that each member is charged, which immediately has an immediate impact on both the administration and asset sides of the business because as people leave and they are not replaced, benefits payments flow out of the business.
The results showed that the number of stand-alone retirement funds has dropped to 328 in 2016 from 338 in 2012, while the number of active members has increased by 1029000 in 2016 from 855000 in 2012.
Titanium Capital analyst Charles Bole said: "The challenge is the space Alexander Forbes is in, which is going to make it difficult for the company to show strong growth, and I think the key drivers of their business, especially employment, are not in their favour."
Derrick Msibi, the managing director of Investment Solutions, said pension fund administrators were under pressure because big businesses were retrenching workers.
"Most people don't realise that large corporates in SA are on a major efficiency drive, which involves looking at head count and there is a general reduction around large corporates in terms of overall people they hire," said Msibi.
He said the manufacturing, mining and telecoms sectors were on a process to lay off workers.
"The growth in employment is coming from the public sector and small and medium enterprises, which tend to not have retirement provisions for their people.
"So we have not really benefited a lot from the growth in employment from medium size enterprises, which employ between 10 and 20 people," he said.
sibanyonim@sowetan.co.za
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