saving
The only way to get people to save more is if
they are forced to do so. This is especially true of
a country that has so many people who are not
financially literate.
What is more, improved household savings will benefit individuals and ease the stressful levels of personal debt among consumers.
But how can we save our savings – how can the nation be
groomed to become more provident in matters financial?
Innovative plans are being made by the Government to encourage a greater sense of awareness among South Africans of the
need to save and to make savings and investment simpler and
more attractive.
The proposals, contained in a series of consultation papers
[Technical Discussion Paper D for public comment], would offer tax-free
returns in various instances, for example, interest-bearing accounts
in bank deposits, retail savings bonds or interest-bearing unit trusts
such as money-market funds; or equity accounts, which invest in
shares or property unit trusts.
According to the proposals, earnings and capital growth within
these after-tax savings schemes would be tax-free with a combined
limit of R30 000 each year and a lifetime limit of R500 000 per
individual.
Welcome as such proposals may be, however, they must be seen
in the context of the harsh realities of an emerging economy. The
level of joblessness in South Africa is inordinately high, and it is
problematic to encourage people to preserve retirement savings
when there is no provision for basics like food.
Nor can the task of changing attitudes and developing a culture
of saving be left to state-driven incentive schemes or advertising
campaigns. The financial services industry, which is interfacing
daily with ordinary citizens, has a key role to play in educating
consumers to the need to save.
Savings – forcing the issue
South Africans are resisting to adopting a tradition of saving towards their
future that orgnisations are forced to think on behalf of its employees
The idea of a compulsory savings or pension scheme has been on
the table in South Africa for well over a year, following the release
of a discussion paper by National Treasury.
This concept is being hotly debated in countries like New
Zealand and Canada – where problems of imp