Retirement Insights | 1 min read

Government workers as a market for financial planning – an overview

In his presentation at the Glacier Public Sector Summit 2021, in partnership with Sanlam, Masale Godfrey Selematsela, President of FEDUSA, defined public sector employees as workers at all levels of government, including local government and state-owned enterprises. In the first quarter of 2017, it was estimated that the government employed around 2.8 million people across all categories of work. With this vast, diverse employee base, Selematsela outlined some of the unique challenges in the public sector and how these could present opportunities for financial advisers.

It’s a matter of scope

Selematsela pointed to the wide spectrum of levels of work that are performed in the public sector –from farm labourers to career politicians, and everything in between. Career civil servants such as teachers, health care workers, law enforcement officers and defence staff form a sizeable chunk of the employee base. While the opportunities for engagement by intermediaries in this sector exist, choosing a niche that is accessible, would probably present the biggest challenge.

The size of the wallet in the middle market

The average salary that South Africans earn is around R21 432 per month, and it has increased from R20 859 at the end of the first quarter of 2018. This equates to approximately R257 184 per year. Currently, it is estimated that in the public sector the average annual salary is between R352 000 and R393 000 according to data from Stats SA‘s quarterly employment survey. Selematsela notes that teachers, who make up almost a third of the public service, form the largest number of recipients of salaries.

What does this mean for intermediaries?

Selematsela notes that qualified, appropriately authorised financial intermediaries are best-placed to provide much-needed financial education to public sector employees to enable them to make informed financial and investment decisions. Anecdotal evidence shows that many government employees have never given their pension fund a thought throughout their careers, until six months before they retire. Furthermore, differences between a provident and pension fund are rarely understood; the need for gap cover for disability beyond what the employer offers is not always obvious; and financial goalsetting is seldom considered. The gaps in pre- and post-retirement planning and financial risk management are spaces that intermediaries can fill, and FEDUSA is eager to advance the relationship between the public sector, Glacier and Sanlam. It’s up to intermediaries to step up and fill the gap.

Glacier Financial Solutions (Pty) Ltd and Sanlam Life Insurance Ltd are licensed financial services providers.

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