State-owned pension funds have been rocked by scandals over the past few years. Transnet corruptly appointed the Gupta-linked Regiments Capital as fund manager; Eskom overpaid Brian Molefe millions in employee benefits; and the Public Investment Corporation bankrolled unsavoury politically charged deals, to name a few. But it is not unsavoury acts that pose the biggest risk to the country's largest financial asset. It is the act of legislation, which may prove the biggest liability of them all.
According to an analysis by the World Economic Forum (WEF), the combined retirement savings gap of the world's eight largest economies is growing by $28-billion every 24 hours. If nothing is done to slow the growth rate, it estimates the deficit will reach $400-trillion by 2050, or about five times the size of the global economy today.
It has to do with a growing ageing population that is living longer and the younger millennial folk that are skimpy on the savings front. This problem is amplified by fertility rates.
The population of retirees globally is expected to grow from 1.5 billion to 2.1 billion from 2017 to 2050, while the number of workers for each retiree is expected to halve from eight to...