A thought-leadership series on the future of retirement outcomes across the continent
For decades, Africa’s pension conversation has largely been framed around a familiar set of questions.
How do we increase pension coverage? How do we grow contributions? How do we bring the informal sector into retirement savings? How do we improve investment returns? How do we strengthen governance and regulation? How do we grow pension assets as a percentage of GDP?
These are important questions. But perhaps we have been starting the conversation at the wrong end.
The fundamental question should be much simpler: What does the African worker believe a pension will actually do for them?
Because if people cannot see the value of a pension in the life they hope to live tomorrow, it should not surprise us when they are reluctant to sacrifice consumption today to finance it.
That is why I increasingly believe that Africa does not merely have a pension problem. It has a retirement outcomes problem.
And until we address the second, we may struggle to solve the first.
We Have Built Pension Systems. But Have We Built a Compelling Retirement Proposition?
Across the continent, significant progress has been made in pension reform, regulation, administration, governance, investment management and technology. Yet pension coverage remains limited in many markets, particularly among workers outside conventional formal employment. The usual explanation is that Africa has a large informal economy. That is certainly part of the story. But I believe there is another question we need to confront:
Have we made the pension proposition sufficiently compelling for the ordinary African?
Consider what we are asking someone to do. We are asking a 30-year-old to give up part of today’s income for a benefit that may only become tangible three decades later. We are asking a trader whose income fluctuates from week to week to prioritise retirement alongside school fees, rent, food, healthcare, business capital and extended-family responsibilities. We are asking a young professional, perhaps supporting parents and siblings while simultaneously trying to buy a home and raise a family, to become enthusiastic about something called a pension contribution.
And then we often communicate its value using the language of legislation, contribution rates, tax treatment, investment returns, fund values and retirement age.
Technically correct. But emotionally distant.
People do not aspire to pension funds. They aspire to lives. They want dignity. They want independence. They want somewhere decent to live. They want access to healthcare. They want to educate their children. They want freedom from financial dependence. They want purpose. They want the ability to continue contributing to their families and communities. And, ultimately, they want to grow older without becoming a burden to the people they love.
That is the value proposition the pension industry should be selling.
Even Formal-Sector Coverage Can Conceal a Value Problem
There is an uncomfortable question the industry should ask itself:
If pension participation suddenly became entirely voluntary tomorrow, how many people currently contributing would continue doing so at the same level?
That question matters. A significant number of employees participate in pension arrangements because pension contributions are embedded within the architecture of formal employment. You join an organisation. HR gives you the employment forms. There is PAYE. There may be statutory social-security deductions. There is medical cover. And there is the pension scheme. You sign. The deduction appears on your payslip. Every month thereafter, money goes into retirement savings.
This is good from a policy perspective because compulsion and automatic participation can overcome human tendencies to postpone long-term saving. But there is a danger.
Compliance can create participation without creating conviction.
The employee may be covered by a pension scheme without ever truly becoming a retirement saver. To them, the pension contribution can feel like another payroll deduction — something that happens to their salary rather than something they consciously value. That distinction becomes visible at moments of financial choice.
When people change jobs, do they preserve their retirement savings? When additional voluntary contributions are available, do they increase their savings? When they receive salary increases, do they allocate some of that increase toward retirement? When retirement benefits become accessible, is the instinct to preserve them or consume them? And when individuals leave formal employment for entrepreneurship or informal economic activity, do they continue saving voluntarily?
If participation collapses the moment compulsion disappears, we should ask whether we ever successfully communicated the value of the pension in the first place.
The Informal Sector Makes the Problem Impossible to Ignore
The challenge becomes even more pronounced in the informal economy. The formal employee may have HR, payroll and an employer-sponsored scheme doing much of the behavioural heavy lifting.
The informal worker does not.
For that person, every contribution competes directly with today’s needs. And therefore the question becomes brutally straightforward:
Why should I put my money there?
We can respond with tax incentives. We can develop micro-pension products. We can reduce minimum contributions. We can enable mobile payments. We can digitise onboarding. We can make contributions flexible. All of these are necessary innovations. But none completely answers the fundamental question.
What am I buying?
If the answer is simply “a pension when you reach retirement age,” we may not have created a sufficiently powerful proposition. Especially for someone facing urgent financial demands today. The informal-sector pension challenge therefore cannot be solved through distribution alone.
It requires a value proposition.
Perhaps We Have Been Selling the Product Instead of the Outcome
Imagine if the industry changed the conversation.
Instead of: “Save for retirement.”
We said: “Build the financial independence that allows you to choose how you live later in life.”
Instead of: “Increase your pension contribution.”
We said: “Every contribution purchases a little more freedom from financial dependence in old age.”
Instead of: “Your target replacement ratio should be 70%.”
We asked: “What kind of life do you want to be able to afford when your salary stops?”
The financial mathematics remains important. But the conversation becomes human.
And this matters because retirement itself is human.
Retirement Adequacy Cannot Be Only a Number
Our industry understandably gravitates toward measurable indicators. Fund value. Investment return. Contribution density. Replacement ratio. Income replacement. Assets under management. These are indispensable. But none, on its own, tells us whether someone is experiencing a good retirement.
A retiree could achieve an apparently respectable replacement ratio and still struggle because of healthcare costs. Another could have accumulated substantial savings but enter retirement carrying significant debt. Someone else could be financially secure but psychologically devastated by the loss of professional identity. Another retiree could have adequate income but no meaningful social connections or sense of purpose. And another could spend retirement supporting financially dependent adult children and extended family.
This is particularly important in the African context, where retirement frequently occurs within networks of intergenerational responsibility. So perhaps we need to broaden our definition of a successful retirement.
Retirement adequacy should ultimately ask whether people have the financial, physical, social and psychological capacity to live their later years with dignity, independence and purpose.
That is a much more demanding standard than simply paying benefits accurately and on time. But it is also a much more meaningful one.
This Changes How We Measure the Success of a Pension System
Imagine two pension funds. Fund A has excellent investment performance, efficient administration and strong governance. Fund B has all those things too. But Fund B additionally knows:
• what proportion of members are projected to achieve adequate retirement income;
• how many members preserve benefits when changing employment;
• how financially prepared members are five and ten years before retirement;
• how members understand healthcare costs in retirement;
• how much debt members are carrying as they approach retirement;
• whether retirees are converting accumulated assets into sustainable income;
• and whether members actually understand the retirement outcome their savings are designed to create.
Which fund is truly managing retirement?
That distinction matters. Because a pension fund should not simply be an institution that manages money until somebody reaches retirement age. It should be part of an ecosystem designed to help that person arrive at retirement prepared.
This Is Bigger Than Pension Funds
Responsibility does not belong to one institution.
Regulators must ask whether regulation is ultimately producing better member outcomes. Trustees must move beyond fiduciary oversight toward stewardship of retirement outcomes. Administrators must evolve from recordkeepers into platforms that help members understand their retirement trajectory. Investment managers must connect investment performance to the long-term purpose of the assets they manage. Employers must recognise that retirement preparedness is part of employee financial wellbeing. Technology providers must build systems around people, not merely transactions. Financial advisers must move beyond product distribution toward lifetime retirement planning. And members themselves must increasingly understand that retirement cannot be outsourced entirely to employers, trustees or governments.
It requires personal ownership.
The Opportunity for Africa Is Enormous
Africa does not have to replicate retirement systems designed for different economies, demographics and labor markets. We have an opportunity to design something more appropriate to our realities.
A retirement ecosystem built for formal and informal workers. For regular and irregular incomes. For mobile-first populations. For extended families. For longer lives. For changing careers. For entrepreneurship. For people who may move repeatedly between formal employment, self-employment and informal economic activity during a single working life.
But that system must begin with a different question.
Not: How do we get more Africans into pension schemes?
But: How do we create retirement outcomes that Africans genuinely value enough to save towards?
Because once the value is understood, pension saving begins to change from an obligation into an aspiration. From a payroll deduction into an investment in future independence. From compliance into ownership. And from simply having a pension into deliberately building a retirement.
That, I believe, is the conversation Africa’s pension industry now needs to have. Because the ultimate measure of our success cannot simply be how much money the industry manages.
It must be how well Africans eventually live after work.
Next: Conversation 2 – The Missing Millions: Why Africa’s Pension Model Must Be Redesigned for the Informal Economy.
