There was a time when I loved writing about controversial topics.
I was never that active on Facebook, but back when it had the Notes feature, I used it a lot. Not sure if that feature still exists, but this was a long time ago. I was still in high school.
I’d write these opinionated pieces, hit publish, and open a can of worms. Since I was around 15 to 17, it’s hard to tell now whether I did it for the reaction or just out of immaturity. Either way, I was always opinionated, and as introverted as I was, I never shied away from speaking my mind. It was my Facebook, after all.
Of course, I deleted most of those posts a few years ago, leaving only the ones related to creative writing or my teenage views on the world. It would be interesting to go back and see what’s still there, just to get a sense of how I thought back then. I still remember reciting one of my pieces in matric before publishing it on Facebook Notes and getting a standing ovation.
My English and Maths teachers even suggested I formally publish it. Ironically, the piece was about the relationship between mathematics and real life. Hehe pretty bold, considering I was terrible at Maths. People liked it, though, so it must not have been too bad. It was called Life Mathematically. Cringe!
But that was always me. Thinking of things, writing them down, and sharing them.
Before I turned 10, I was already writing rap songs in English, even though I could barely string a proper sentence in the language (thanks to village school struggles).
My younger brother was my audience. I even had a full rap book; until my mother burned it. (Still not over that. I could’ve had mixtapes by now.)
I mention all this because this piece – just from the title – feels like something my opinionated teenage self would have written. But I’ve changed since then.
I take my time with my opinions now, let them simmer, and do my research (even if I sometimes look for evidence that confirms what I already believe).
That said, this topic has been on my mind for a while. It’s obviously controversial, but I’m going to take a stab at it. I have no agenda here, and if I do share it, it’ll only be with a handful of people. I’m not trying to stir up drama. It’s just my view. Some might agree, others won’t, who cares?
We all have the right to express our opinions. And sometimes, being wrong is the first step towards learning something new.
Why Am I Calling Pensions a Scam?
Let me be clear. I’m not against pensions in principle. If you live to 100, they’re great. But we act like they’re the best way to build wealth, and that’s where I disagree.
Let’s look at actual data. The average life expectancy for men in South Africa is 59.2 years, while for women, it’s 64.8 years. These numbers are shockingly low.
Now, assume someone starts working at 25, contributes to their pension, and retires at 60. Based on the averages, most men will die before they even get to enjoy the money they spent decades contributing towards. Women, on average, will get just four years of “retirement” before passing away.
This is a joke! A joke that’s not funny. A joke that kinda pisses me off.
Considering these life expectancy rates, isn’t it better for people to enjoy their money while they’re still alive rather than hoarding it for a future they may never see?
“I’m saving for retirement.” But… what if you don’t live to see retirement?
The Reality of Pensions
The sad truth is that pensions are only beneficial if you live long enough. And that’s a gamble – because most people don’t. And even if you do, will you really get back everything you put in? Not likely.
- What you finally receive (after heavy taxation) is far less than what you contributed.
- Annuities generally pay out way less than your working salary, because the assumption is that you’re now slowing down and “everything is paid off.”
- Health issues: arthritis, high blood pressure, are almost guaranteed after years of stress and labour. And now you’re expected to stretch those reduced payouts to manage your declining health?
Why wouldn’t you be sick after slaving away your good years, only to get a fraction of your earnings in return? What were all those years of contributions for? A short-lived retirement full of financial restrictions?
A Flawed System
I seriously doubt that most people ever recover what was deducted from their salaries over the years. And in South Africa, where only 6% of people retire comfortably, I wouldn’t be surprised if the retirement age is pushed even higher; 70, maybe even 75.
The U.S. has reportedly considered delaying retirement age due to the low number of people retiring comfortably.
But how does that solve anything? Now you just have an unhealthy workforce filled with people too sick to enjoy retirement once they eventually qualify for it. The sad truth is, most will die in their 50s and 60s anyway.
And for those who do make it to their 70s or 80s, they’ll be stuck with an aggressively taxed pension.
Their benefits will be reduced, their bodies will be failing… and soon enough, those bodies will be lowered into a grave, with little to no reward for decades of hard work.
Pensions Are A Tax Disguised as a Benefit
Pensions, in my humble opinion, are just another form of tax.
- You get taxed on your salary.
- Then you get taxed again when you finally access your pension.
- And for what? A system most people won’t even benefit from?
What’s the Solution?
I honestly don’t know. But there has to be a better way.
The Two-Pot system – which allows South African workers to access a portion of their pension savings before retirement – was supposed to help.
But the billions withdrawn within months of its introduction prove that people don’t want a nibble of their own money. They need a genuine alternative NOW!
And where exactly is the tax leniency when this Two-Pot money comes from years of already-taxed income?
If I’m expected to retire at 60 and I die at 59 – what exactly was I paying for? Who actually benefits?
Sure, you could argue that your kids benefit. Fair enough… but only partially. After taxation and administrative costs, what they inherit is often a fraction of what you contributed over decades.
Is that a legacy or a consolation prize?
Calling this a scam might be controversial. But think of it this way: imagine a game you play for over 30 years with no guarantee you’ll ever see the winnings. At least a betting company tells you by the end of the game whether you’ve won or lost. A pension doesn’t even give you that.
So, What’s the Alternative?
I don’t have all the answers, but here’s what makes sense to me:
1. Diversify, Don’t Depend
A pension shouldn’t be your only plan. Investing in property, income-generating assets, or even a side business gives you more control over your future.
Rental income or dividends that pay you well before retirement make more sense to me than relying on money you might never touch. We only live once. Plan for the future, but not at the cost of enjoying the present. Why wait until 60 when there are options available now?
2. Flexible Retirement Models
Why is retirement a one-size-fits-all system? Some people might want to scale down work in their 40s, while others may prefer to keep working part-time into their 70s.
Forcing everyone into the same mould is outdated – worse still when politicians, who enjoy higher pay and better benefits, can work well into their 70s while the average worker, earning far less, is sidelined and left to survive on crumbs.
I’m not arguing for or against working beyond 60. Just pointing out the glaring irony.
3. Access to Funds at Meaningful Life Stages
Instead of locking away a massive chunk of earnings for an unpredictable future, why not structure pension funds so people can access portions at major life milestones, like starting a business, buying a home, funding their kids’ education?
This way, people benefit while they’re alive and not just in their final years.
4. Retirement Planning That Factors in Life Expectancy
If the average South African man dies before 60, shouldn’t that influence how pensions are structured? Maybe a large portion should be made available earlier, based on realistic longevity statistics.
The way things are now, the system feels designed for an ideal world… not the one we actually live in.
My Final 2 Cents: Your Money, Your Life
I’m not saying pensions are completely useless; that would be a foolish assessment. Forced savings do teach discipline and delayed gratification. But if the system is built on the assumption that you’ll live long enough to benefit from it, and the data shows most people won’t, then blindly following it is a gamble at best.
Any system that takes more from you under the promise of giving more, only for you to end up with less – and possibly never see a cent of it – deserves to be questioned.
Scam might be a strong word. But a bad deal dressed up as a benefit is still a bad deal.
© Phumzile