If retirement planning is the last thing on your mind, you may want to stop what you’re doing right now and answer this question – Will you have enough capital to retire by the age of 60, or will you be forced to rely on a South African state pension?
The South African Government Pension
Like many countries in the world, the South African government provides a state pension for citizens over the age of 60. However, unlike some European countries which offer generous pensions to their citizens, South Africa’s government finances don’t allow for large state pensions to be paid out – here is a basic overview of the government’s Old Age Pension.
The SA government services website provides the following information about the old age pension or Older Person’s Grant currently available to South African citizens.
- Monthly pension amount: R1260.00 plus R20.00 extra for persons over 75
- Who qualifies: Any South African citizen over 60 with an annual income lower than R49 200 or assets worth more than R 831 600. For married couples, the combined yearly income can’t exceed R99 840 and combined assets should be less than R1 663 200.
- The application process: You would need to apply to the South African Social Security Agency(SASSA) and provide them with documentary proof that you qualify for the grant. The application process may take up to three months.
Could you retire on a South African state pension?
From the information above it should be clear that state pensions in South Africa are aimed at older persons from lower income groups who are in genuine need of financial assistance. The monthly pension payment certainly won’t support most people at today’s cost of living, even if the pensioner lived with relatives.
Some people are under the impression that a state pension will help to ‘top up’ their monthly pension pay-out, but this is sadly not true. In order to qualify for the government pension, you would need to fall within the income and asset requirements listed above, making it very unlikely that someone with an existing pension and assets like a home would qualify for a state pension at all.
Simply put, the South African government pension is not an option for most of us – the monthly payment is too small to cover today’s cost of living, and most people with some sort of pension would have too many assets to qualify.
This fact should remind us that when it comes to retirement, we South Africans are own our own. Careful retirement planning is essential for everyone who wants to enjoy a stress-free and comfortable life after 60.