EDITOR'S COMMENTS

Growth happens outside of your comfort zone is a phrase often quoted as evidence of the upside to challenges that one faces. No one can argue that we are facing an inordinately challenging time in our country. The question is: do these challenges present opportunity for growth in our industry?

Close to home, the average South African household budget remains tight given, amongst other things, the increases in interest rates over the last 18 or so months. This leaves less money for discretionary spending generally, and savings and investments specifically. In fact, many households are accessing their savings to make ends meet at the end of every month.

The two-pot system, arguably one of the biggest industry changes of our time, is specifically intended to alleviate some of this financial stress, whilst at the same time forcing preservation to build retirement savings. As I write this, we are waiting for some of the details to be ironed out, but I think it would be naïve to expect that this change is simply going to “go away”.

What the two-pot system does, I believe, is bring the realms of retirement funds and personal financial planning closer to each other. Historically, these have been two very separate fields – the retirement fund being a forced saving by virtue of an individual’s employment and any other savings and investments done voluntarily “in a separate place”. Now, the worlds collide where an individual will have access to a portion of their retirement fund every year. What they do with this option needs to be considered in the context of their unique, and possibly immediate, financial needs and overall longer term financial plan.

And so with the two-pot system we find individual financial planners and employee benefit consultants getting a glimpse into each other’s worlds. And some might say it’s about time.

Whilst we hold our collective breath in anticipation of how many retirement fund members will be accessing their retirement funds, it does present an opportunity to communicate better with our customers. Uplifting general financial literacy on the long term implications of spending this money on the “wrong” things has to be one of our key objectives.

I trust the articles in this issue of Pensions World SA challenge you to explore the end of you comfort zones and provoke your thinking.

To think about where the world is right now is possibly an exercise in hope at best and hopelessness at worst. This will not be the first time you have read the sentence: The Covid-19 global pandemic changed our world irrevocably. And for me, as I reflect on these changes, the one thing that sticks with me about the pandemic is that everyone had an opinion, and everyone was convinced that their opinion was truth.

But who or what formed these opinions?

The news. Family members. Your mentors. Social media. Work colleagues. Experts.
We live in a time when messages of “truth” come at us relentlessly. Some messages are credible, coming from informed experts and some are quite simply fake news. But to discern between the two is becoming increasingly difficult. And both influence the world around us, so you need to pay attention. You just need to ask your teenager about how a thumb up or thumb down can decide the truth of last weekend’s party.

So how do we, as an industry, and as individuals, make sure that we remain informed, that we know the facts, to make sure that we make sound decisions to ensure sustainability of the financial and social systems within which we work?
To me the answer lies in something that is deeply ingrained in us as South Africans. Diversity and inclusion is the foundation of the solution. By really listening to and respecting another’s views, experiences and opinions, we enrich our own perspective and broadens everyone’s horizons. The brutal reality is we’re not going to fix this world’s current problems with last decade’s or last century’s thinking. Outdated, stubborn, inflexible mindsets are simply not going to cut it.

So when next you find yourself despairing in a sense of hopelessness or you’re unable to shake a negative thought pattern, have a cup of coffee with someone who has a different perspective to you, who has followed a different path to yours. Read an article on a topic that you typically in the past would have not considered. Try something new. Talk to the world around you.

No one person is the custodian of ultimate truth. But perhaps, as a collective, the sum of our thinking is greater than each of us individually.

I hope you find this issue as thought provoking as always.

A throwback to high school physics and Newton’s third law where for every action there is an equal and opposite
reaction. Whilst this is undeniably true in the science lab, it strikes me as equally relevant to one’s mindset, views and
thoughts about the world right now.

If I were to ask you to write a list of words to describe our current world reality, I am sure your list would include words
like volatoile, uncertain, unprecedented, war, instability, unsustainable, insecurity. Permacrisis was the Collins Dictionary
word of the year for 2022. A series of catastrophic events, feeling like one crisis, is followed by another, and then
another, in unrelenting waves of upheaval. You just about catch your breath and steady yourself, and there is another
issue to deal with. And you put your head down and take care of the issues you face, both personally and professionally.

But what if there’s a different perspective? What about the equal and opposite reaction?

As our worlds change so unrelentingly, is there not the commensurate opportunity brought about by the unknown, the
never been experienced before? Could a change of mindset bring about a powerful new narrative for us each
individually, and for the industry collectively as a whole?

We all know that normal simply isn’t any more. Now more than ever the world needs open minds, positive creative
thinkers who colour outside the lines of normal to reimagine a different future. We can’t simply keep doing more of the
same and expecting a different result.

Our role as an industry is critical to the financial wellbeing of many in this country. People who save and invest
consistently deserve inspired problem solvers, who link these savings to sustainable, society building initiatives for a
betier country.

How do we do that? Perhaps the answer to that question lies in the equal and opposite reaction. Where others see
problems, perhaps open your mind to see an opportunity or a solution. Where there is much negativity, what about
looking for the prospects for positivity?

Back to the science lab. It is a proven fact that the mind is a powerful influencer of our realities. If we are able to reshape
or reframe our realities to look for the positive, we may be taking a very real step in the right direction. And perhaps your
word list for 2023 will include words like abundance, meaning, joy and growth.

I hope you find this issue as thought provoking as always.

Batten down the hatches is a phrase used in sailing which means to safely tie down the boat’s sails and fasten the entrances in preparation for rough seas. When a ship is about to hit stormy seas, the captain will order the crew to batten down the hatches.

We are at a time in our country’s, and the world’s, history of incredible volatility and turmoil – rough seas. After dealing with a worldwide pandemic, we breathed a collective sigh of relief in the comfort that everything would soon return to normal. But “normal” seems to be an elusive place just over the next horizon.

The ongoing war between Russia and the Ukraine, continues to send ripples of consequences in international waters. Sharp increases in energy prices have strained European household budgets and the impact on food security is bordering on catastrophic.

Inflationary pressure is a persistent wind on the bow. Global inflation is expected to peak this year at 9,5%, remain under pressure in 2023 and only expected to decelerate in 2024. And this inflation extends beyond just food and energy. Global increases in the cost of living has dire consequences on household budgets, as more and more people experience financial hardship.

At home, load shedding continues to rock the boat. This, on top of our unique political and economic challenges, leaves our country in a vulnerable place, and our policy and decision makers in an unenviable position. It requires a delicate hand to set the course of fiscal policy to navigate the economic cross winds and protect the most vulnerable.

Our industry is not immune to the storm clouds brewing. The waves are high and the currents strong. Trustees are faced with, dare I say, never seen before macroeconomic conditions. Regulation 28 has gone some way to presenting a solution to some of the issues. Investing in infrastructure for us as a country is now no longer a nice sounding line in our investment policy statements.

Retirement funds have a role to play and will require a courageous hand on the tiller.

Our anchor of retirement fund legislation and experience, provides comfort of an industry that is able to weather this storm. Let’s keep collaborating, keep pushing the boundaries of valuable partnerships and keep forging into the unknown.

I hope you find this issue as thought provoking as always.