Working until you turn 80 to afford a comfortable retirement sounds a bit much. But what about working just five years longer?
We are living longer than we thought we would when we started our first jobs and began saving for retirement. This means that there is a gap in our retirement savings – we will simply outlive our savings. Will it help if we increase the retirement age?
The 2025 Old Mutual Corporate OnTrack data points to a deceptively simple reality that small, targeted changes in retirement fund design can have a big impact on employees’ long-term financial security.
As South Africans live longer than ever, the question of what it means to be “old” is changing and so must the way we think about retirement. Extending the normal retirement age is emerging as the single most powerful lever employers can use to close the retirement savings adequacy gap, Blessing Utete, managing executive at Old Mutual Corporate Consultants, says.
“Adding just five more working years can lift retirement income by lengthening the contribution period, compounding investment growth for longer and reducing the number of years over which savings are drawn down, all without increasing member contribution rates.”
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Example of successfully raised retirement age
Valterra Platinum raised the normal retirement age for its corporate staff from 60 to 65, giving more than 1 300 members additional years of contributions and investment returns. Backed by targeted communication and annual retirement reports that encouraged voluntary contributions, the change translated directly into improved projected replacement ratios, Utete says.
“This example underscores the key role employers play in shaping financial security after work. The policies and choices employers make can set employees on a path to dignity in retirement or leave them facing a shortfall. By making informed decisions, employers can directly change the retirement trajectory of their members.”
However, fund design also plays a part. Beyond extending the working horizon, the Old Mutual Corporate OnTrack data shows that fund design itself holds further levers for improving retirement adequacy. Structurally, the design of defaults, contribution rates and preservation policies determines whether members keep saving enough, for long enough, to secure meaningful outcomes, he says.
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Investment strategy must also change
On the investment side, Utete points out that strategy plays a role by matching portfolios to members’ life stages, while annuity choice at retirement can dramatically alter income, boosting projected replacement ratios by more than 20%. Together, these levers confirm that thoughtful fund design, applied in different dimensions, can shift long-term outcomes.
“The data shows that targeted changes, from contribution rates and preservation to investment strategy and retirement age, can lift projected replacement ratios over time. The most powerful results come when meaningful contributions are paired with sustained participation, which is why employer choices matter so profoundly in shaping retirement security.”
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