2026 certainly started with a bang, due to international developments. Venezuela, Greenland and Iran have been dominating headlines. In between all of that we had the richest man in the world, Elon Musk, sharing his view that saving for retirement will be irrelevant in 10 to 20 years’ time.
Musk envisions a future where technological advances will make goods, services, healthcare and education so abundant and affordable that scarcity effectively vanishes.
His prediction is that a universal high income benefit would replace the need for wages or traditional savings, as people would be able to access whatever they need, or want, without the necessity of working for survival.
Current realities however paint a different picture. Social security benefits in the United States, and elsewhere in the developed world, are under major strain, primarily driven by aging populations, longevity and mounting fiscal pressures. In the developing world such a vision appears even less attainable, as economic constraints, infrastructure gaps and social welfare challenges make the idea of a post-scarcity society seem far removed from present conditions.
The State will care for me?
It has been almost six years since the Social Relief of Distress (SRD) grant, South Africa’s closest equivalent to a universal income benefit, was introduced. Yet, the debate about its long term funding continues due to strains in government finances. National Treasury’s proposal to convert this R370 per month benefit to a job seeker’s allowance is facing a lot of resistance from those who argue that it would exclude many vulnerable individuals and worsen poverty.
Meanwhile pensioners in South Africa who meet the requirements of the means test for the State Old Age Grant need to continue to survive on R2,320 per month.
Our neighbouring countries of Namibia and Eswatini are also currently grappling with major debates around the introduction of a compulsory national pension fund. Back home the Department of Social Development is expected to re-release its proposals on major social security reform in South Africa, including plans for a compulsory contributory national social security scheme. It has been over four years since the previous Green Paper was issued and then withdrawn shortly thereafter; and many anticipate that forthcoming proposals may largely mirror what was proposed previously.
Two pots: Part two and the challenge of unclaimed benefits
The dust is far from settled following the implementation of the so-called two pots pension system, and already there are discussions brewing about what further reforms are required. During the period of public discussions around the design of the two pots system, a key point of debate was whether people who have been unemployed for extended periods should be allowed to access their retirement pot money. This debate is likely to resurface but its outcome is closely tied to the broader reform of the social security system in South Africa.
South Africa already faces a massive problem with unclaimed benefits, with billions of rands of retirement savings sitting in unclaimed benefits funds. The introduction of compulsory preservation of retirement pot money is likely to increase the volume of unclaimed monies, as people change jobs and lose track of relatively small retirement pots that remain inaccessible until retirement. Over time such small savings pots are at risk of being eroded by administration fees.
Internationally, the United Kingdom has recently followed the example of Australia by requiring pension administrators to consolidate preserved pension savings, compelling competing firms to exchange information in order to achieve this goal. In South Africa, a “pot follows member” system was considered but was abandoned as being impractical largely because members don’t automatically join a new retirement fund when changing jobs. As the matter stands, it is up to individual retirement funds to encourage exiting members to transfer their retirement savings with them to their new retirement fund.
Even before unclaimed benefit retirement funds were formally allowed from 2008 onwards, the South African government has been in favour of the introduction of a national unclaimed benefits fund. Indications are that further discussion papers on this will be issued during 2026. As per the 2022 discussion paper issued, the expectation is that the aim of such a national unclaimed benefits fund is to house both unclaimed retirement savings and other unclaimed assets such as demutualisation shares.
To save or not to save?
The pensions industry continues to observe that South Africans are still not saving at levels required for a secure retirement. The long quoted figure – that only 6% of South Africans can afford to retire comfortably – has remained largely unchanged for decades. Recent reforms such as the introduction of compulsory annuitisation and preservation are expected to improve this over time; but they don’t address the broader issue of inadequate coverage.
National Treasury introduced the idea of pensions auto-enrolment for the formal sector back in 2021, yet no further discussions or meaningful progress have happened since then. And South Africa seems to be lagging fellow African countries that have compulsory systems in place.
These systems are not perfect, and although they still face challenges such as coverage, compliance and administration, South Africa can still try to learn from their experience.
Conclusion
Working in pensions is never dull, and 2026 is likely to bring even more change – along with vigorous debate – about which reforms are needed most. These reforms impact everyone living in South Africa, one way or the other. For this reason, we encourage all stakeholders to take an interest in the public discussions and to share their views on the proposals. Participation in the national conversation is essential to shaping a retirement system that works for everyone.