A new old joint campaign shocks consumers on SA’s retirement savings crisis.

Old Mutual Corporate Managing Director Malusi Ndlovu said the social experiment was launched to remind South Africans of the true cost of retirement, as part of the company’s commitment to ensure South Africans have adequate retirement savings.

In addition, the campaign sought to highlight to decision-makers such as employers the benefits of a good pension fund for their employees. Low savings for retirement remains a concern in South Africa, with National Treasury reporting that 94% of South Africans will not be able to retire by age 65.

In the backdrop of this controversy, Old Mutual Corporate has launched its social experiment.

The exercise involved eight South African families from different walks of life who were asked to fill their grocery needs for a month. What they don’t know is that it’s a simulation of buying at retirement and how the price and income are adjusted when the breadwinner retires.

The findings were a rude awakening not only for the participants but for the wider South African community. Some families were over budget – from 100% to 800%, meaning families would have to increase their savings by up to nine times, depending on how many years they have invested now and before retirement.

“The reason for the social experiment is to raise awareness with individuals about taking responsibility for their retirement outcomes. We used groceries to show how something as basic as a monthly transaction can affect a person’s retirement coverage,” Ndlovu said.

Campaign mechanics

The eight families were carefully selected to accurately reflect South Africa’s demographics and became willing subjects after verification on social media, but were not told who was behind the campaign. They were asked to share their current income; Current pension-fund savings; Monthly retirement savings contribution; Grocery expenses; years to retirement and a typical monthly shopping list.

A grocery store was set up and the families were stocked with their monthly purchases, then they were asked to fill their trolleys with the items their families needed each month.

The family didn’t know that the prices were inflated in line with the CPI to reflect what they would pay for those items in retirement.

As each family reached the checkout, they faced the harsh reality that they had spent anywhere from 100% to 800% more. Based on the information provided – Old Mutual actuaries have calculated their projected income in retirement.

Participants had to select items to avoid until they reached the maximum 100% of their retirement income portion of their grocery budget.

The key to financial literacy

Ndlovu said improving financial literacy is important to help individuals and families achieve financial independence.

“We are thrilled to be working with such amazing people who have trusted us enough to share their personal stories on this campaign. By providing an intimate picture of their financial lives, they are playing a powerful and informative role in empowering South Africans to become financially literate and prosperous,” he said. By showing relatability, we hope to inspire others to begin the process of changing their future for the better.

“While every family or individual’s financial situation is unique, this campaign is relevant to every South African family. We believe it will have a significant impact on our country’s financial literacy and savings culture, Ndlovo concluded.