South Africa’s retirement system is leaving millions of people exposed as they approach old age, a failure with consequences that will be felt in households across the country for decades. In the 2026 Marsh CFA Institute Global Pension Index, South Africa ranked 51st out of 55 countries, scoring an overall 50.4 and earning a C grade. Behind the numbers lies a simple civic concern: a large share of the population reaches retirement with little or no income security, and the burden of that gap falls on families, communities and the public purse.
The scale of the problem is stark. FinMark Trust’s 2025 FinScope survey found that just 10% of South African adults have a retirement product, while 86% of economically active adults, approximately 25.2 million people, have no retirement provision at all. Jabulani Khumalo, senior data and analytics specialist at FinMark Trust, says the findings reflect the difficult financial trade-offs many South Africans face every day as they balance immediate needs against long-term security. “While many are using available financial tools to cope with immediate pressures, the decline in savings and retirement preparedness highlights the urgent need for financial solutions that strengthen resilience and support long-term financial well-being,” Khumalo says.
At the heart of the gap is the voluntary nature of workplace retirement schemes. Unlike some countries, South Africa does not require employers to provide retirement funding arrangements for their employees. Belinda Sullivan, head of Corporate Consulting Strategy at Alexforbes, says this limited reach is one of the biggest obstacles to broader retirement security. “Voluntary is key because there’s no obligation on an employer in South Africa to provide retirement funding arrangements for their employees,” Sullivan said during the index briefing. Only 58.1% of formally employed South Africans participate in occupational pension or provident funds, meaning a substantial proportion of workers have no such provision at all.
The index breaks retirement systems into three pillars. Adequacy measures the benefits provided to members, sustainability considers whether a system can keep delivering those benefits, and integrity assesses regulation, governance and member protection. South Africa’s weakest area was adequacy, where it scored 37.3 and ranked 54th out of 55 countries, receiving a D grade. Sustainability scored 47.8, placing 39th, also a D grade. Integrity was the strongest component at 75, earning a B+, although still only 36th position, down from an overall score of 51 in 2025.
The report acknowledges genuine strengths, including relatively strong pension assets relative to gross domestic product, a sound regulatory framework, governance standards and protections, and communication requirements for fund members. Sullivan similarly describes the local retirement industry as having substantial funded assets and sound pension regulation, with funds generally well managed from a governance perspective. But the index identifies clear areas for improvement: increasing minimum support for the poorest older people, expanding occupational retirement fund coverage, introducing minimum mandatory contributions, improving household savings, and encouraging greater labour force participation among older people as life expectancy rises.
Meanwhile, affordability remains a central barrier for households trying to put money aside. The 2026 FNB Retirement Insights Survey found that 53% of respondents under 60 without a retirement plan said they could not afford to save because their disposable income was being spent elsewhere. A further 24% said they did not know where to access savings and investment products, up from 13% in 2025. There are signs of progress, however: 73% of South Africans under 60 reported having a retirement plan, compared with 60% in 2025, and plan ownership among lower-income consumers rose from 19% to 48% over the same period. The two surveys measure different things, as FinScope looks at ownership of retirement products while FNB measures whether respondents have a retirement plan.
Financial pressure does not necessarily ease once people leave the workforce. Among retirees in FNB’s Personal segment, 74% said the cost of living had been higher than they anticipated, and 46% reported healthcare costs significantly more than planned. Family commitments added further strain, with 51% of over-60s in FNB’s Personal Banking segment and 47% in its Private Banking segment surprised by the financial implications of family responsibilities. Sizwe Nxedlana, CEO of FNB Private Banking and Wealth Management, says retirement planning must account for the realities people face rather than assumptions about life after work. “Retirement is often imagined as a time of independence, freedom and fewer obligations, but the survey findings show that the reality of retirement is often more complicated,” he says.
What changed, though, is that possible remedies are now on the table. Sullivan points to automatic enrolment, which signs employees up for retirement funding by default, and auto-escalation, which gradually increases the share of income contributed over time. She cautions, though, that any such measures must account for affordability and address the difficulties faced by freelancers, informal workers and people running their own businesses. The index similarly points to broader occupational pension coverage, higher contributions and stronger support for poorer older people.
For the millions of South Africans currently outside the system, the stakes are everyday ones: whether old age brings security or hardship. The challenge, ultimately, is not simply improving the performance of existing pension funds, but ensuring that more people have the opportunity to participate before they reach retirement age.