As I look back at the first six months of 2023, I simply cannot believe where the time has gone and remind myself that time waits for nobody. Each one of us needs to appreciate that our time is precious and should be utilised to achieve and maximise our dreams and goals in life.

Thinking of the importance of time, I am reminded that July is the National Savings Month in South Africa, a time when the spotlight is on the need for South Africans to attempt to save and invest more. National Savings Month was an initiative started in 2001 by a non-profit organisation, the South African Savings Institute (SASI). The annual campaign aims to raise awareness of the importance of savings to enable people to have some form of financial buffer during periods of recession, inflation, and higher interest rates and to provide a source of annuity income when a member retires.

The reality is that with massive unemployment, high-interest rates and a very stretched economy, the South African Gross savings rate was a very poor 14,5% in March 2023. Overall, consumer debt is growing in the country, and there has been a noticeable increase in the number of distressed consumers who require assistance servicing their growing debt load.

Discretionary savings are also low, with the majority of South Africans not having enough savings to last more than a month (at most) if they lose their income/jobs, according to recent industry surveys.

Despite these headwinds, the annual national campaign, conducted by SASI, tries to raise awareness of the importance of planning and saving, as well as trying to get all South Africans educated and active when it comes to investments and savings.

Saving is defined as income not spent, but instead put away to assist with an unexpected financial challenge.

Some of the campaigns conducted during July focus on encouraging people to:

• Start saving as young as possible.
• Save before you pay anything else.
• Sign a debit order for a fixed monthly savings amount – particularly for those people who do not contribute to an employer retirement fund.
• Re-invest or preserve your retirement fund monies when you resign from your employer.
• When exiting employment, try and only take the tax-free portion in cash rather than the full amount, as this is not tax efficient.
• Encourage your children to save.

At Chartered Employee Benefits, we support these campaigns, and our commitment lies in assisting South Africans to enhance their knowledge, as it is important to help drive more awareness around savings and investment.

Introduction of New regulation – “Two Pot System”

The National Treasury has acknowledged the country’s low retirement savings rate and, in December 2021, proposed reforms to the country’s existing legislation. This includes a new ‘two pot’ system which would allow South Africans to access a portion of their savings early. This will be accompanied by the requirement that the remaining two-thirds are preserved over the long term.

Most importantly, analysts in the financial services industry have already estimated that this system could lead to a doubling ( due to the introduction of compulsory preservation) of retirement savings in South Africa – while still providing access to a portion of their savings annually.

National Treasury released the second draft of the Revenue Laws Amendment Bill on 9 June 2023, with the proposed implementation date being 1 March 2024. The Bill is still in draft form, and industry comments were required by 15 July 2023.

The recent regulatory changes have no doubt been influenced by the work of such institutions as the SASI, which have actively campaigned, with July as National Savings Month, to improve the savings habits of South Africans, and over time we sincerely hope an improved savings culture can be reinforced amongst all South Africans.