We Simply Not Saving for Retirement


By Staff Reporter WINDHOEK The majority of Namibians are not saving for their retirement. Official statistics show that about 160 000 Namibians out of an estimated economically active population of 420 000, contributed towards registered retirement funds as at March 2005. The implication is that the majority of the remaining 200 000 economically active Namibians – after allowing for 60 000 Namibians contributing to individual retirement annuities – are likely to rely on government to help them fund their retirement years. This was the view of Johannes !Gawaxab, Managing Director of Old Mutual’s African Operations, when opening the Retire Right Conference in Windhoek last Thursday. He says of even greater concern is the fact that the Namibian savings rates are getting worse every year. In 1994 savings as a percentage of household income amounted to 10.7% compared with 3.2% in 2004, a drop of 70%. The fact that gross national savings as a percentage of gross national disposable income increased from 24.8 % in 1995 to 28.6% in 2005 does not tell the full story as it is distorted by external factors such as SACU revenues. Compounding the challenge of providing for one’s own retirement is an increased life expectancy combined with lower investment returns. In the 1980’s people retired at an age of 65, had a life expectancy of 13-14 years after that and purchased a pension at 16 % interest. In future those who retire will be about 55, have a life expectancy of around 28 years afterwards and purchase a pension at 8% interest. This means that today one needs about 90% more capital to buy the same level pension as in the 1980’s and about 50% more capital to buy the same inflation-linked pension. !Gawaxab said about 123 000 Namibians currently receive monthly pension payments of N$370 at an annual cost of N$546 million, whilst 18 600 Namibians do receive disability grants, also from the government, costing about N$83 million annually. Considering the latest life expectancy figures for Namibia, which dropped from 58.3 years in 1995 to 40.2 years in 2006, according to NAPPA, the pressure to provide a Basic Income Grant, annual calls to increase the monthly old age pension and the fact that we are not saving enough for our retirement, heightens the need to provide adequately for one’s retirement. This scenario presents a series of challenges that needs to be tackled by financial service providers like Old Mutual in partnership with government, says !Gawaxab. This is too important a responsibility to leave it to the government alone to shoulder. The Retire Right Conference, sponsored by Old Mutual and attended by pension fund trustees, benefit consultants and service providers, focused on topical issues such as the National Pension Fund, Retirement Fund Reform, trustee activism, strengthening of the non-banking financial sector regulatory environment, retirement planning and trans-parency within the retirement fund industry.