Imagine working for four decades only to discover that your retirement income barely covers the cost of your groceries. This is not a distant fear but the reality for most South Africans. The system must change.
Traditionally, discussions about impact have focused on how retirement funds invest – allocations to infrastructure, private equity or developmental projects. While these discussions are important, they do not reveal the full story. Real impact lies in addressing the basics: reducing costs, improving member understanding, ensuring adequate contributions and protecting savings from premature withdrawals.
The real lever of impact is communication. While retirement funds do communicate with members, their message seldom gets through: Members are still confused about fees, risk profiles and the significance of their current choices for the future. Without understanding, members are much more likely to fall prey to short term thinking and instant gratification.
True impact can only come when funds are able to shift from communicating to educating. With the right education, members can shift their mindset, recognising that small sacrifices today will translate into security and dignity tomorrow.
To achieve this, funds must rethink both the message and the medium. Written communication isn’t enough, as fund members do not read all the documentation they receive. Short, engaging videos can break down complex ideas like compounding or tax into accessible stories, while interactive calculators allow members to test the impact of different contribution levels.
Beyond this, AI-powered assistants can provide personalised insights and simulate the long term effects of different savings and withdrawal decisions, helping members understand the tangible consequences of their actions. Gamification could turn financial education into interactive experiences that reward learning and reinforce positive behaviour, while virtual and augmented reality experiences could immerse members in potential retirement futures to experience the benefits of patience, higher contributions or deferred withdrawals.
Combining these advanced digital innovations with personal engagement such as workshops and face-to-face sessions will allow funds to evolve from simply transmitting information to genuinely transforming behaviour and understanding.
International examples provide lessons: In Australia, a combination of compulsory contributions, member education and fee transparency has created one of the strongest pension systems in the world. In Chile, regulators tightened communication standards so members could see the long term effects of their choices. Both show that changing outcomes requires more than policy – it requires changing member behaviour. South Africa’s economy is far poorer than Australia’s, however, and many households here cannot save anything beyond their day-to-day needs.
Recent developments are encouraging, though. The Financial Sector Conduct Authority (FSCA) has introduced new Conduct Standards for benefit administrators, requiring clearer protocols around communication, transparency and complaints. The regulator also insisted that funds explain the new two-pot retirement system to members in a simple, timely and comprehensive manner, and it may even request copies of member communications when reviewing rule changes. A national “Know Your Rights” campaign has been launched to improve public understanding of pensions, while draft standards linked to Regulation 28 promise greater disclosure on how funds invest.
While these are important steps forward, regulation alone will not guarantee member understanding. Too often, communication retains the form of dense documentation or one-off notices that have little effect on behaviour. The challenge now is for funds to transmute these regulatory requirements into real education that is engaging, accessible and consistent.