SASI, National Treasury and corporate partners including Nedbank and Old Mutual will kick off July National Savings Month with the inaugural Savings Convention at Maponya Mall in Soweto on 3-4 July. The two-day public expo enables partners to bring savings, financial literacy knowledge and resources to the people.
With the South African population continuing to demonstrate a low savings rate and insufficient financial planning, there is an urgent need to improve financial literacy levels and encourage savings, according to Prem Govender, Chairperson of the South African Savings Institute (SASI). “Our new Savings Month initiative, the SASI Savings Convention, provides consumers with first-hand guidance as a one-stop platform for productive interaction between the demand and supply side of the financial sector – consumers, practitioners, regulators and policy makers.”
Citing Statistics SA, Govender says the SA population spends, on average, 76 percent of their monthly income on debt. The remainder goes to necessities such as food, housing, utility bills and transport. The 2014 Finscope survey indicates that while there was an increase in the salaried adult population in 2014, 78% of the adult population earned an average personal monthly income of less than R2 000, and only 44% of the salaried individuals have any long-term savings or retirement products. According the Reserve Bank Quarterly Bulletin June 2015, although gross savings has risen in the last year, so has debt. Moreover, those with low financial literacy are vulnerable both to predatory lending and the selling of inappropriate financial products or services. “The importance of improving financial literacy lies both in helping people to protect themselves and as well as helping them grow their wealth.”
SASI has rallied various partners to bring savings knowledge and resources to the community. The expert panel discussion on ‘Savings and the Sandwich Generation’ will highlight new research on the financial challenges that affect this group, commonly referred to as ‘Black Tax’. “The focus for National Savings Month 2015 is on savings vehicles and issues such as the intergenerational wealth gap and its impact on saving. We need to find solutions to these specific challenges and work to improve financial literacy,” says Govender.
Nedbank, Old Mutual, 1Life, FNB and organisations like the National Stokvels Association of South African (NASASA), National Credit Regulator (NCR), the Financial Services Board (FSB), the Financial Planning Institute of Southern Africa (FPI), the Aids Foundation of South Africa (AFSA), Operation Hope, the Johannesburg Stock Exchange (JSE) and National Treasury will be on hand to advise convention visitors on financial wellness and provide useful saving tools.
Among the products that will be highlighted is the new Tax Free Savings Accounts (TFSAs), which offer consumers the opportunity to invest up to R30 000 annually, and R500 000 over their lifetimes – with no tax payable on interest earned.
Dharmesh Bhana, Head of Retail Funding at Nedbank, says: “As a great place to save and invest, Nedbank continues to offer great value banking and affordable means of saving for clients to help instil a culture of saving. As such, we spend a great deal of time listening to and understanding the needs of new and existing clients to ensure we offer a choice of distinctive and relevant savings options tailored for diverse individuals and market segments such as the “Sandwich Generation” whose role in creating a vibrant society and economy is vital.”
It is against this backdrop that Nedbank launched MyFinancialLife™ and MyMoneyMap™ financial management tools aimed at empowering the SA population to manage their finances, understand their spending habits, save, and more importantly, achieve their financial goals and aspirations. Similarly, MyMoneyMap™ seeks to encourage kids to learn about money principles and save from an early age – working with their parents.
Derick Ferreira, Old Mutual head of product management of Customer and Intermediary Solutions at Old Mutual, says: “We know from the 2014 Old Mutual Savings and Investment Monitor research findings that almost half of working metro South Africans aren’t saving for their retirement.” (The 2015 edition of the Old Mutual Savings and Investment Monitor will be released on 30 July.)
As a responsible business, Old Mutual is committed to helping address this and build a savings culture in South Africa. Over the past year it has launched three innovative products that make saving simple, easy and convenient.
The 2-in-ONE Savings Plan encourages individuals to save for long-term goals while simultaneously catering for short-term goals and emergencies. The Old Mutual Invest Tax Free Plan offers great flexibility and choice, including providing customers with immediate access to their funds with no penalties. The Old Mutual Money Account from Old Mutual Finance is South Africa’s newest, innovative transactional solution. Every time you swipe your card, an amount you choose is automatically invested in the Old Mutual Money Market trust – helping you save effortlessly.
To educate more South Africans on the importance of debt reduction and wealth creation, Old Mutual recently launched an online, interactive version of the successful On the Money financial education programme. John Manyike, head of financial education at Old Mutual, believes that improving savings in South Africa is one of the major socio-economic challenges facing us as a society.
“Old Mutual is proud to collaborate with like-minded institutions like SASI to reverse our poor saving record and promote sensible money management not only during Savings Month but beyond,” he says.
Govender added: “SASI, along with our partners, is committed to the financial wellbeing of South Africans and we hope this will be the start of many more similar initiatives on a national basis.”
