EDITOR'S COMMENTS

The retirement and investment industry in South Africa is undergoing a transformative phase, propelled forward by regulatory reforms, economic shifts and the rise of innovative players like Evolutionaries, who are reshaping how South Africans approach investing, retirement planning and wealth management.

The introduction of the two-pot retirement system one year ago was a game changer and the speed and creativity with which the industry evolved was unlike anything I’ve seen before in my career, spawning a new generation of not only retirement fund members, but also industry influencers. You’ll see our special feature for this edition of Pensions World SA is Evolutionaries, to inspire your thinking about where our industry is headed.

Through our EBnet platform’s Evolutionary Awards, we acknowledge the thought leaders who challenge the status quo to improve outcomes for fund members and individual investors. They move the dial in a way that has meaningful impact for those they serve. And appreciate that even the most humble spark can be a detonator for growth, efficiency or upliftment.

In 2024, the winners, as voted by you, the industry, were:

• Alexforbes – for their Evolution in Investments with the AF Retirement Navigator portfolio.
• GTC – for the Evolution in Improving Member Outcomes with their Altertude fintech platform.
• Alexforbes: for their Evolution in Employee Benefits and Advice with their Retirement Fund of the Future.

These represent cutting-edge solutions that position retirement funds and members proactively towards emerging trends, ensuring that they remain ahead of the curve. The great success of last year’s awards prompted us, ourselves, to evolve. For 2025’s awards, we have expanded the scope to include not only the above three categories, but three new categories:

• Most promising new women-led initiatives
• Most promising new black-owned initiatives
• The Greatest Impact

We look forward to celebrating with this year’s winners who again will be chosen by way of a peoples’ vote at EBnet’s 2025 Evolutionaries Conference from 6 – 10 October.

The two-pot claims experience has furthered the evidence of the ongoing challenge of long-term financial security for South Africans – 49% of South Africans live below the poverty line and lack confidence in retirement planning. These talk to an economic and political reality that we can no longer ignore. What role can we play in growth, inclusion, financial literacy and hyper-personalisation?

As always, I hope this issue sparks your thinking.

Security and resilience – the two words that best describe the past few months. And not only in the cyber context.
When I penned my Editor’s note for our Q1 edition of Pensions World SA for 2025, I could never have predicted the extraordinary geopolitical and market volatility that we would see in the coming months. And even if I had, I’m not sure I would’ve believed myself.

As we reflect on the past quarter, South Africa’s financial landscape has been a dynamic interplay of opportunity and uncertainty. The markets have experienced pronounced volatility, driven by global economic shifts, local policy developments, and the ever-present spectre of geopolitical tensions. For investors and advisors, these times call for smart thinking, careful planning, and staying focused on protecting and growing wealth in spite of the challenges.

The South African economy has faced some tough moments. The rand has fluctuated against other currencies, affected by rising prices worldwide and issues at home, like power shortages and debates over government spending. (Whoever could’ve foreseen a cancelled budget speech?) The JSE has been unpredictable, with industries like mining and banking reacting to changing commodity prices and interest rate worries. Globally, central banks’ efforts to tame inflation have introduced uncertainty, with the U.S. Federal Reserve and European Central Bank’s rate decisions rippling through emerging markets like ours. Locally, the South African Reserve Bank’s cautious approach to monetary policy has aimed to balance growth and price stability, but the path remains fraught.

For the financial sector, a big focus has been on cybersecurity and resilience, in light of Joint Standard 2 of 2024 taking effect on 1 June 2025. As more people use apps and online tools for banking and investing, the risk of cyberattacks is growing. South Africa has seen some major data breaches already, showing how important it is to stay protected.
Cybersecurity isn’t just a tech issue – it’s a vital part of keeping our clients’ and members’ savings safe. In our special feature for this quarter, we have experts sharing their views on all matters cyber – from platforms, to passwords, to risk and insurance.

At the heart of it all is resilience—the ability to bounce back and keep going, no matter what comes. Whether it’s handling market ups and downs or protecting your money and personal information online, being prepared and staying strong is key.

As we move into winter, I trust you find this issue brimming with interesting content.

This issue of Pensions World SA has been an exciting one to put together. We believe that the two-pot system requires us to evolve from being either focused on retirement funds OR individual financial planning. Rather, we need to support the industry in bringing these two advisory capabilities much closer together. With this in mind, we approached a number of individual financial advisors with this issue’s theme of “inclusive financial planning”.

Their different interpretations of this phrase was thought provoking in itself. Some viewed this as financial planning being much closer to, and really part of, the institutional consulting advice given to trustees and employers (and consequently, members). Others interpreted this as financial advice being for everyone – not only the well-to-do few who have significant assets in retirement funds. And still others took it to mean that financial planning is not a solo endeavour and should take the whole family into account – including spouses and other family members.

None of these approaches are wrong! And reflecting on them, opens an unlimited number of avenues and opportunities of helping fund members achieve better retirement outcomes.

You will thus see in this issue not necessarily the customary “special feature” section, but rather a renaming of our usual financial planning section, to “Inclusive financial planning” – reflecting the focus of this issue. It is an idea that is carried through many of the other sections and articles as well.

Two-pot also spotlighted the need for financial literacy and education as a national imperative. This was the focus of the FSCA’s Financial Education inaugural summit in August last year, where the theme was “Creating accessible financial education for all South Africans”. I believe that there is a lot that the traditionally distinct retail and institutional advisors can learn from each other, to meet this need, in a very impactful way.

It is in this light that I particularly enjoyed the comment made by Bryan Nicol, CFP®, CEO of Freedom Financial Planning, one of this issue’s contributing authors:

We need to dispel the misconception that employee benefits and financial planning are two separate entities – the client wins when we bring the two together. 

And so, as we start 2025, I hope, as always, that you find this issue as thought provoking and interesting as we did putting it together for you.

There’s no shortage of things to talk about as we wrap up the last quarter of 2024. From two-pot implementation, to market volatility and geopolitics, there’s a lot to cover.

The two-pot system: a game changer

One of the biggest events this quarter was the rollout of the two-pot retirement system on 1 September. We held our collective breath as Monday, 2 September rolled around, and we weren’t disappointed. Claims came flooding in. Whilst some administrators were caught slightly off guard initially, I think we can say that overall Day 1 implementation was a resounding success – a testimony to what the industry can achieve with collaboration.

One issue that the two-pot system has certainly spotlighted is the poor levels of financial literacy amongst South Africans. As an industry we’ve recognised this challenge and, from what I’ve seen in efforts around improving member outcomes, there are some exciting developments leveraging technology. I think this conversation will carry on through 2025.

Economic climate: cautiously optimistic?

On the economic front, South Africa is looking at a growth rate of around 1.0% for 2024, boosted by investor confidence after the May elections. It’s nice to see the rand showing some strength against major currencies as well! Inflation seems to be settling in the government’s targeted range, and we all let out a sigh of relief when the Monetary Policy Committee cut interest rates by 0.25% at their last meeting.

Investment trends: shifting strategies

When it comes to investment strategies, there’s been a noticeable shift towards passive investing. With many active managers struggling to outperform their benchmarks, trustees are increasingly leaning towards diversified portfolios that mix both active and passive investments.

Infrastructure investments are also gaining traction. Fund managers are realising that these projects can deliver not only solid returns but also meaningful social impact – especially given South Africa’s ongoing energy challenges. It’s encouraging to see this recognition that sustainable investments can benefit both investors and society as a whole.

As we look forward into 2025, our industry is in an exciting phase and navigating this evolving landscape will require agility and creativity from all involved.

After one of the most busy years I’ve experienced in this industry, I wish you a blessed holiday season.