Banker S.A. December 2012 | Page 17

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