The South African government is planning to introduce a National Social Security Fund (NSSF), which is expected to have far-reaching effects not only on individuals and companies, but also on the financial services industry.
Currently, South Africa’s state pension system is very limited. To combat this, the government plans to expand it dramatically by ensuring that more people start saving for retirement at an early age (via compulsory contributions), and making sure that savings are preserved for retirement when individuals change jobs. At the moment, employees are not compelled to preserve any accumulated retirement savings that they withdraw from their retirement fund on resigning from an employer.

Major impact on the private market
The introduction of the NSSF has potentially far-reaching implications for all players in the retirement market, since a large proportion of the benefits that are currently provided by the private sector may be diverted into the NSSF in future. This would mean that the remaining market becomes significantly smaller.

Details expected soon

Although plans for the NSSF were first announced in 2007, not much detail about exactly how the NSSF will operate was provided. It is now expected that the government will produce a considerably more detailed roadmap for the creation of the NSSF towards the end of 2011 or in early 2012.

As a result, it is highly likely that the retirement landscape in South Africa will change very significantly over the next few years as preparations are made for the implementation of the NSSF.

Momentum Employee Benefits
Following the 2010 merger of Momentum and Metropolitan into a single firm, a recent Swiss Re survey has revealed that Momentum Employee Benefits now has a combined market share of 26% of the group risk market in South Africa, and is ranked No 1 in terms of annual premium income (ZAR 3 billion).
Momentum Employee Benefits is a division of MMI Holdings Limited (MMI), a South African based financial services group listed on the South African stock exchange, the JSE. MMI operates in 12 countries outside of South Africa, providing employee benefits, healthcare funding and administration, as well as long-term insurance solutions.

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