This is an exciting time for SA’s retirement industry. The country has a rare opportunity to improve its pensions architecture. With auto-enrolment under active discussion, the country can create a retirement savings model that is inclusive, efficient, and puts it at the front of the savings industry in Africa.
SA’s two-pot system, introduced in September 2024, divides retirement savings into two components: a “savings pot” that allows limited access during a member’s working life, and a “retirement pot” that must be preserved until retirement. The goal is laudable — to balance short-term financial access with long-term security — but more than 2.4-million early withdrawals since launch show how easily retirement savings can be eroded by immediate needs.
Sadly, about 5-million formally employed South Africans remain outside any retirement fund, and only 6% have saved enough to retire comfortably. We know it is difficult for all countries to get their population engaged with long-term savings, regardless of their financial literacy. Overcoming these challenges will require a proven framework that makes saving easy, builds trust and delivers visible value.
A potential blueprint for SA could be the UK’s auto-enrolment reforms. Introduced in 2012, auto-enrolment made pension saving the default for employees. Within a decade, more than 10-million additional people, many of them younger and lower-income workers, were saving for retirement. Its success shows that when saving is simple, portable and transparent, millions of people who might otherwise have opted out can be brought into the system.
During my five years as the pensions and financial inclusion minister in the UK in 2017-22, I oversaw the expansion of the auto-enrolment programme to ensure savers receive a minimum pension contribution of 8% of their wage. The change is remarkable: most of the working population now have proper private pensions, with long-term financial resilience. The journey is not over, but the change to auto-enrolment has been transformational.
I am in Cape Town this week attending the Institute of Retirement Funds Annual Conference and then meeting a variety of pension and retirement services professionals. SA’s proposed phased approach to auto-enrolment, starting with formal salaried workers, can draw directly from the UK experience. The system should be straightforward to join; savings should follow the worker from job to job; and every member should have clear visibility of their account through secure, easy-to-use digital tools.
With an increasingly young and online workforce in the country — more than 22-million people under 35 and nearly 79% of the population connected to the internet — they can be the greatest beneficiaries of reform. This is a generation accustomed to managing their lives through apps, making digital onboarding, mobile portals and virtual advice the most effective way to reach them. Engaging these savers early is essential not just for lifelong financial security but for building trust in a system that is transparent, easy to use and visibly secure from the outset.
Digital platforms must be designed to withstand fraud, manipulation and data breaches, with clear audit trails and full regulatory oversight from the outset. For employers, especially SMEs, which account for 50%-60% of the workforce, automated systems can make contributions and compliance far simpler and cheaper.
It can also provide regulators with better oversight, ensuring that contributions are paid and standards maintained. Informal saving practices remain deeply embedded, but if pension reform is also designed to provide clear benefits to employers and regulators, it becomes easier to encourage savers to invest in the system.
Building trust will take time and won’t be easy. It depends on transparency over costs, strong governance and ongoing financial education. Subtle behavioural nudges, such as default contribution rates, opt-out enrolment and personalised digital prompts, can gradually make saving an accepted and consistent habit.
If SA combines bold policy decisions with secure, mobile-first technology, it can set a new benchmark for inclusive pensions across Africa. Even in challenging economic conditions it can create a system that delivers dignity in retirement, supports growth and earns public trust. Few countries get the chance to rebuild their pensions system for future generations — SA should seize it.
• Opperman, the longest serving UK pensions minister, is now senior adviser at global pension firm Smart Pensions.
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