The average South African struggles to manage their finances. The statistics on South Africa’s savings landscape are both shocking and saddening.
Long before the Covid-19 pandemic and subsequent lockdowns brought many businesses and families to their knees, the financial situation of the average South African was precarious at best.
While media and government commentators focus primarily on the unemployment rate (currently at 32.5% according to data for the October-December 2020 quarter * 1), even those who are employed struggle to grow their money throughout the month.
According to a study by the fintech platform PayCurve, nearly 80% * 2 of South Africans take out expensive unsecured loans to cover their monthly financial obligations, as BusinessLive reports.
Household debt represents 73.7% * 3 of disposable income. 84% * 4 of those surveyed needed money before the next payday. And only 6% * 5 of retirees can afford to do it “comfortably”, according to the analysis of Alexander UKTN Member Watch 2020.
These statistics show that, on their own, the average South African struggles to manage their finances. Interestingly, when the employer offers savings and financial planning assistance, savings rates improve dramatically. Research from the United States shows that people aged 15 to 18 are 6 times more likely to save when their employer sets up a fund for work. The same trend appears to be true for South Africa, where around 90% 7 of retirement savings are in workplace plans.
Employers can help
Employers can therefore have a significant impact on the financial well-being of their employees by requiring mandatory savings. Matching employee contributions and offering additional services such as financial advice and planning is also very helpful.
Employee benefit programs go beyond offering a savings product and financial advice. Medical assistance, life, critical illness, funeral and disability coverage, and counseling for mental and emotional distress, can all be included in the package. These are designed to help employees manage their personal and financial well-being to live comfortably within their means.
Often, these benefit programs are the only access people have to a savings plan, financial advice or medical coverage. This is why it is essential that employers choose good benefits that form a consolidated package capable of taking care of their employees.
At Alexander UKTN, we work in partnership with employers to personalize their benefits offering with solutions tailored to their needs. We provide these services for a fee to institutions when employees enroll through their employer. We also offer training and support throughout the working life of employees – and beyond – to help them achieve lifelong financial well-being. Now that’s something they can count on.
1 * www.reuters.com/article/us-safrica-economy-unemployment/south-africas-unemployment-rate-jumps-to-new-record-high-idUSKBN2AN0S1
2 * businesstech.co.za/news/finance/426406/heres-how-many-south-african-rely-on-loans-to-make-it-to-the-end-of-the-month/
3 * businesstech.co.za/news/finance/426406/heres-how-many-south-african-rely-on-loans-to-make-it-to-the-end-of-the-month/
4 * businesstech.co.za/news/finance/426406/heres-how-many-south-african-rely-on-loans-to-make-it-to-the-end-of-the-month/
5 * mg.co.za/business/2020-11-01-sa-has-a-retirement-savings-crisis/