Is the widespread concern being expressed by the life assurance industry about the low level of saving just a cynical attempt by the industry to get you to put more money into its high-cost, inflexible products so the industry can continue to make excessive profits and pay exorbitant incentives to senior executives?
This was the question raised on a number of occasions by speakers and delegates at the annual conference of the Institute of Retirement Funds (IRF) in Durban this week.
I have attended two life industry conferences over the past two weeks: that of the IRF and, last week in Cape Town, that of the Life Offices' Association (LOA).
The conferences were like two different planets. The IRF dealt with reform of the pension funds industry. The LOA dealt mainly with the industry's deteriorating image, the need for financial advice and the failure of South Africans to save.
The LOA conference sent out confusing messages. It seemed that much of the time the senior executives were still clutching at straws, often paying lip service to the need to put you, the consumer, first, while trying to find ways of maintaining an often greedy army of financial advisers, their company profits and their excessive remuneration packages.
(Sometimes I think it is time the government introduced a supertax bracket for anyone earning more than, say, R1 million a year.)
Fundamental reform
Most of these executives now seem to understand that it is necessary to reform the life assurance industry, but some do not seem to realise just how fundamental that reform needs to be if consumer confidence in the life industry is to be restored.
There is no doubt that the executives are correct in pointing out that we are saving too little for our own good. We definitely do not save enough for retirement, and many of us are foolhardy with our retirement savings, cashing them in and spending the money before we retire.
But, as Jonathan Dixon, the chief director of financial sector policy at the National Treasury, points out, creating a savings culture is undermined by unfair practices and erosion through high costs.
It is not as if reasonably priced and structured investment vehicles are not available. They are available through the collective investment industry with its unit trust funds and exchange traded funds (ETFs).
And I am not talking about the linked investment service product industry, which is as bedevilled with high and hidden costs and unsavoury practices as the life assurance industry. I am talking about a pure unit trust investment made directly with a unit trust management company or an ETF company (such as Satrix).
It is disappointing that so few of the senior executives of the life assurance companies (and, more importantly, of the retirement fund service provider industry), attended the full three days of the IRF conference. I think if they had attended, they would better appreciate the challenges that face the life assurance industry and the retirement industry.
They would also better understand that there is a fully justified, deep and fundamental distrust of the life assurance industry and the retirement fund services provider industry.
It is an indictment of the senior executives that they were not there to hear it. As far as I could see, only Sanlam, in the person of Thabo Gamedze, its head of employee benefits, understood the need to attend the conference and to interact with delegates.
Some senior executives of other companies merely flew in to deliver their views and then flew out, while most simply were not there.
Infantile behaviour
And then my old friend, Alexander Forbes, is behaving like a spoilt child. In recent years it has played a smaller role at the IRF, despite being the country's biggest retirement fund administrator and services provider.
My sources at the IRF tell me that Alexander Forbes has withdrawn much of its support because it has not liked the conference agendas.
Incidentally, these agendas were structured to increase retirement fund trustees' knowledge. Perhaps it does not serve the purposes of Alexander Forbes to empower trustees with knowledge. What particularly got up Alexander Forbes's nose this time is that I was again asked to speak at the IRF conference.
The reputation of the life industry is also not served by companies such as Old Mutual resorting to its squadron of lawyers in an attempt to fight its way out of a corner.
Fortunately, Old Mutual does not always get away with it.
For example, it was forced to refund more than R80 million to the members of the CAF retirement fund a few years ago. That was after the Appeal Court found that Old Mutual had not exercised proper care when it handed over the members' retirement savings to their employers, the Korsten brothers from Pretoria. The brothers used the money to prop up a failing company.
If Vuyani Ngalwana, the Pension Funds Adjudicator, is correct (and I have no reason to doubt him) that Old Mutual is now introducing new arguments in an attempt to win its High Court appeals against his rulings, this is simply unacceptable.
The life industry has been trying hard to discredit Ngalwana. Claims by companies such as Old Mutual that they are trying to protect policyholders' interests by opposing Ngalwana's rulings, are rather disingenuous.
They simply will not be believed. We all know how our interests have been protected in the past.
It is this protection that led to the industry having to cough up almost R3 billion in what can be regarded as an admission of guilt fine for its past protection of policyholders. These policyholders were, and still are, being subjected to massive confiscatory penalties when they can no longer afford to pay their contributions.
Ngalwana has shown that he is fair (to all sides) and a real protector. He has become a national hero. So it is little wonder that when the life assurance industry speaks of the need for saving, people such as the retirement fund trustee delegates to the IRF conference question the credibility of the industry.
Next week I will tell you about my presentation to the IRF conference - the one Alexander Forbes would have preferred I did not make.