A comprehensive guide to retirement planning in South Africa

Let’s delve into the key components of retirement planning.

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Kobus Kleyn, CFP®, Tax and Fiduciary Practitioner, Kainos Wealth

The concept of retirement has evolved dramatically over the past few decades. Traditionally, it signified the end of an individual’s professional journey. However, in today’s dynamic economic climate, retirement is considered a new beginning – a golden period to pursue new interests, travel or engage in social activities. But to fully enjoy this period of life, meticulous planning is vital. This is particularly true in South Africa, where the financial landscape is as diverse as the nation itself.

The importance of advisors’ diligence

When it comes to retirement planning, the role of financial advisors is pivotal. Advisors with an in-depth understanding of South Africa’s financial market can provide personalised advice based on an individual’s financial goals, risk tolerance and investment horizon. However, their roles extend beyond that – they need to conduct rigorous due diligence on fund managers and fund selections to ensure long-term growth efficiency. Advisors must critically analyse the fund manager’s experience, track record, investment philosophy, risk management strategies and more. Moreover, they should regularly review and rebalance the fund selection to align with the investor’s changing needs and market conditions.

The due diligence process is often complex and time-consuming. An alternative to this is utilising the expertise of Discretionary Fund Managers (DFMs). DFMs not only help reduce the burden of due diligence but also provide a more efficient and focused investment management approach, tailored to meet the specific needs and objectives of each client.

Fund management

A well-diversified and balanced portfolio is the cornerstone of successful retirement planning. This means investing in a broad array of assets such as equities, bonds, property and cash. A well-balanced fund structure helps mitigate risk, smoothens returns over time and allows portfolios to adjust according to market volatility.

But here’s the catch: South African investors must also consider investing within their mandate limits. These mandates, set by the investor, limit the fund manager’s ability to take undue risk and help keep the portfolio aligned with the investor’s risk tolerance and investment objectives.

Wills, estates and asset protection

Estate planning in South Africa includes the creation of wills and the selection of assets that fall outside the estate. This approach can result in significant savings on estate duty and executor’s fees and provides protection against creditors. Life insurance policies and retirement annuities are two such products that offer these benefits, ensuring that your hard-earned wealth is protected and passed on to your loved ones in the most efficient manner possible.

Political analysis of South Africa

A sound understanding of the current political situation in South Africa is crucial for retirement risk planning. Political stability, regulatory frameworks, economic potential political risks can greatly impact your retirement savings and investment returns.

Offshore investment and tax considerations

Offshore investing, especially with the rise of Regulation 28, which allows for up to 45% offshore exposure, has become a key strategy for South African investors. It provides diversification benefits, potential for higher returns as well as protection against local market volatility and currency depreciation.

In addition to these benefits, the South African Revenue Service (SARS) offers several tax deductions that can help subsidise your retirement plans. For instance, contributions to a retirement annuity are tax-deductible within limits, providing an excellent opportunity to grow your retirement savings while saving on tax. Therefore, retirement planning is a multifaceted process that requires a strategic approach, extensive knowledge and regular review.

Leveraging the expertise of DFMs can streamline the due diligence process and provide a tailored investment management approach. Whether it’s selecting the right fund manager, creating a diversified portfolio, planning your estate, or considering alternative residency and citizenship programmes – every step demands due diligence. Above all, understanding the political landscape and making the most of offshore investment opportunities and tax deductions can ensure a secure and fulfilling retirement.


Kobus Kleyn has published over 200 articles and authored three books. He is a multiple award-winning professional and holds eight memberships with professional associations. His most recent awards were lifetime achievements awards from the FPI (Harry Brews), The Million Dollar Round Table (Top of the Table Life Membership) and Liberty Group (Life Membership) in 2021/22.