Report reveals SA’s loss of confidence in financial institutions

The Sanlam Benchmark report has revealed a loss of confidence in South Africa’s financial institutions. According to the report, many of its respondents’ confidence in the country and its financial institutions is slowly fading away.

Sanlam Umbrella Solutions Managing Executive, Nzwa Shoniwa says the findings show that people are calling for better governance to restore faith and address the trust crisis head-on.

“South Africa’s stability and future depends on the ethical stewardship of its people’s finances,” says Shoniwa.

Sanlam Corporate Chief Executive Officer, Kanyisa Mkhize says accelerating a better working South Africa means focusing on prevention rather than cure.

Confidence slowly fading away

The key findings of the report indicate that 60% of pensioners do not believe the country’s challenges will be resolved within their lifetime, with most believing corruption is the root of the cause of these challenges. Respondents also said they feel like they are financially vulnerable or exploited. Pensioners said they were worried about not having sufficient funds to live comfortably. Some were worried about their deteriorating health.

Apart from their employer’s retirement arrangements, 39% of the respondents are saving for retirement via savings accounts, while 26% use retirement annuities, 23% with fixed deposits, 21% with stokvels and 19% with tax-free savings.

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Source of financial stress

In 2019, the Benchmark report revealed respondents found debt to be a key contributor to their financial stress. In the latest published report, respondents said they were most concerned about their retirement savings and access to healthcare benefits while some said they were struggling with debt, with little left at month-end to save or take up medical benefits.

The 2024 report released how most of the respondents’ mental health is affected by the financial stress they are currently facing. The report notes how the combined total cost of mental-health-related absenteeism and presenteeism in the country is equivalent to 4,8% of GDP, an indication that South Africa has one of the highest costs of mental illness in the world.

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Wellbeing is as important as a salary

The report shows that 93% of the respondents view wellbeing as important as their salary, while the majority consider leaving a company that does not focus on their wellbeing. Some of the respondents say a holistic integrated health and financial wellness programme delivers higher productivity, ensuring staff happiness.

The report found that employers play an important role in making a difference to their employees. This can be done by implementing integrated healthcare solutions such as low-cost medical scheme options, primary healthcare insurance, on-site clinics, virtual consultations, and Employee Assistance Programmes (EAP) can significantly alleviate the financial burden on employees.

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Alternatives to two-pot savings

To help employees achieve the optimal combination of cultivating a robust retirement savings culture whilst being able to deal with financial distress and the inability to meet financial obligations, employers should consider empowering their team with alternatives to accessing their two-pot savings. These could include loyalty programmes, money management tools, debt management assistance, and access to advice.