Although most consumers believe they will save enough for a comfortable retirement by the age of 58, research shows it is closer to 80.
South Africans’ poor financial literacy is costing the country and consumers millions, especially where preparing for retirement is concerned, with nearly half of the respondents in a recent survey saying they need more financial education.
According to the 2025 Sanlam Benchmark Survey, the 44th edition of some of the country’s most comprehensive research on the retirement fund industry, respondents called for school-level financial education.
If you ever said you learnt nothing useful at school, you are probably right: financial education at school level would have made a huge difference in the lives of many consumers and would have lessened the pressure on South Africa’s retirement system.
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Financial literacy gap could cost millions
Kanyisa Mkhize, chief executive at Sanlam Corporate, says the country’s retirement system is under pressure, not only from economic strain but from a widespread lack of access, understanding and early intervention.
According to the 2025 Sanlam Benchmark Survey, financial literacy gaps could quietly cost the country millions in lost savings, missed opportunities and poor long-term outcomes.
Mkhize says as South Africa’s population ages and the pressures of modern work life intensify, the research underscores the urgent need for a holistic approach to employee health and retirement well-being.
“The findings reveal that tackling financial as well as mental stress is critical to ensure long-term health and economic security for South Africans. The 2025 research spanned interviews with over 70 stand-alone funds, 168 participating employers in umbrella funds and over 500 consumers.”
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Consumers not saving enough for retirement
The key findings show that:
- Only 42% of retirement fund members believe they are on track to save enough for retirement.
- 43% think they will maintain their current standard of living in retirement.
- However, six in ten funds say members will not be able to retire comfortably by the age of 64.
- Fewer than 40% of employer funds allow continued membership after retirement.
- Nearly half (49%) of members are unaware of the post-retirement options available to them.
- 92% are aware of the two-pot retirement system, but only 49% feel confident about their knowledge and understanding of the impact of accessing these savings.
- 44% of those who withdrew from the emergency savings pot used the funds to pay off debt.
- 64% say regular financial education is very important, yet only 11% had access to a financial adviser through their employer fund when they withdrew from the fund, while nearly 50% rely on Google for financial advice.
- 68% feel confident about understanding their medical aid benefits, yet only 47% feel the same way about their risk benefits.
- The number of employer funds offering critical illness benefits increased from 5% in 2019 to 33% in 2025, while umbrella fund participants providing these benefits jumped from 8% in 2019 to 49% in 2025.
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Significant cost of what we do not know about financial literacy
Mkhize points out that financial stress affects productivity as well as employee health and warns that this has major implications and knock-on consequences for individuals, their families and society and the economy.
“This underscores the need for financial literacy and advice. We see people make life-altering financial decisions without the information, support or advice they need while the right intervention at the right moment can shift outcomes. The opportunity is there – we just need to scale it.”
The good news is that amid the less positive survey findings, there are also encouraging signs of progress with engagement increasing, awareness growing and targeted education starting to shift behaviours.
“The challenge now is sustaining this momentum and ensuring it delivers real, measurable improvement,” she says.
Mkhize says the cost of what we do not know in financial literacy is significant. Just 42% of pension fund members believe they are saving enough to retire, while only 43% say they are confident they will be able to maintain their standard of living. More than half (51%) worry they will not be able to leave a legacy.
She emphasises that the picture is equally troubling system-wide, with six in ten funds saying their members will not retire with enough money by the average retirement age of 64 to maintain their standard of living.
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Financial literacy also needed in retirement
Only four in 10 believe that the average retirement age of 64 is still sufficient for financial security, while fewer than 40% of employer funds allow continued membership after retirement, forcing members to navigate a complex financial environment just when they need clarity and support.
Only 23% of employer funds offer critical illness benefits and just two in 10 tailor their annuity strategies for different types of members, highlighting a need for more personalised, fit-for-purpose planning, Mkhize says.
She points out that the survey data shows that understanding, or the lack of it, drives behaviour, with 49% of members saying they are unaware of their pension options at retirement and one in five saying they have not engaged with their benefits because they “don’t know enough about retirement planning”.
“Yet most consumers also believe they will have saved enough to retire comfortably by the age of 58. Conversely, Sanlam Corporate’s internal data shows the age at which most South Africans can afford to retire comfortably is closer to 80.
“This shows the critical need for financial literacy to empower people with the right information to make informed decisions.”
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People only seek financial literacy for retirement when it is too late
The survey shows that most people only seek advice within nine years of retirement and for many there is not enough time to make adjustments that will have a significant effect on their retirement outcomes.
“You cannot act on what you do not understand and right now, the cost of that lack of understanding is carried by individuals, families and the economy,” Nzwa Shoniwa, managing executive at Sanlam Umbrella Solutions, says.
The segments of society most at risk from making bad financial decisions due to poor financial literacy are young people and women. Shoniwa says the financial literacy gap does not affect all consumers equally, with some groups falling behind in ways that could affect their long-term health and retirement outcomes.
“Women are particularly vulnerable, with only 38% believing they will maintain their lifestyle in retirement, compared to 62% of men. Women are generally less confident about their understanding of retirement benefits, with only 39% reporting confidence about their benefits compared to 61% of men.
“This gap extends to other areas including risk benefits, financial advice, value-added benefits like rewards, medical aid, gap cover, primary health insurance, employee assistance programmes and even understanding the financial impact of withdrawing from the emergency savings pot.”
Shoniwa adds that young adults are also at risk. “For many starting their careers, typically between ages 24 and 30, joining a medical aid is often a condition of employment. Just 17% of those under 30 are covered by an employer medical scheme, while 18% receive cash as part of their salary to purchase their own product.
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Appetite for financial literacy about retirement is strong
“However, the complexity and cost of available products can lead to underinsurance, opting out or delayed long-term planning. This group, especially those between the ages of 31 and 40, is also the most likely to cite rising living costs as a barrier to long-term planning. Compounding these decisions, many only start saving for the long term in their 40s.”
That is why it is good news that the survey shows the appetite for better financial guidance is strong, with 64% of members saying regular financial education is very important and nearly half of employer funds supporting retirement planning in schools, while 49% of employer funds believe targeted communication could improve outcomes.
Shoniwa says there is momentum, with nearly 60% of members reviewing their benefits in the past year, probably prompted by the introduction of the two-pot retirement system. “As a result, 66% know the value of their savings and 59% understand how their investments are allocated.
“We see growing engagement but to truly close the gap, we must embed education more consistently, from the classroom to the payslip.”
In addition, Shoniwa points out that no single player can fix the system. “It requires aligned action from government, employers, advisers and administrators. Employers are uniquely placed to support members early. Guidance from the first payslip – particularly around group risk and preservation – can make a lasting difference.
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Better communication needed
He says retirement fund administrators must do more than communicate. “They must deliver seamless advice, access and behaviour-linked incentives. Funds must also outperform and align with members’ long-term goals.
“The 2025 Sanlam Benchmark data is more than a call to action – it is a roadmap. South Africans want better outcomes and they are ready to engage. What they need now is consistent education, clearer communication and simpler systems.
“What we do not know is already costing us but what we choose to teach and how we teach it together could change everything. Financial literacy is the foundation for a system that delivers not just outcomes, but dignity,” Mkhize says.
