More than 11 percent of pensioners who participated in the Sanlam Benchmark survey have cancelled their medical scheme membership because of a shortfall in their income.
This year’s survey shows a large increase in the number of pensioners who cancelled their medical scheme membership and instead rely on the state for health care. Last year, 51.8 percent of pensioners contributed to a medical scheme, compared with 39.6 percent this year. This is a staggering year-on-year decline of 12 percent in medical scheme membership by people who are most in need of health insurance.
Medical scheme members typically face annual contribution increases that are at least three percentage points above inflation as measured by the consumer price index.
The survey also shows that 73.6 percent of retirement fund members are not making any provision for their post-retirement medical expenses. This is well up on the 59.8 percent who in 2013 said they were not saving for these expenses.
The survey shows that 11.3 percent are saving to fund their post-retirement medical expenses through a retirement annuity, 6.6 percent through other investments and 3.9 percent through an insurance policy.
According to the survey, the percentage of pensioners who have a shortfall between their income and their expenses continues to rise, reaching more than 59 percent this year – up from 51 percent last year.
The survey notes that 35.8 percent of the 250 pensioners interviewed have seen their income fall by 40 percent to 60 percent since they retired, while 29.6 percent have seen their income fall by 10 percent to 30 percent.
More than 70 percent of the pensioners who were asked how they cope with a smaller income reported that they have cut back on non-essential expenses. More than 16 percent have had to ask friends or relatives for assistance, and 10 percent have had to dig into other savings.
The survey notes an increase in the number of retirees who spent their entire lump sum payouts from their retirement funds in a short space of time. Some 38.4 percent spent their lump sum within an average of 2.42 years – as opposed to 34.3 percent who spent their lump sums in an average of 3.11 years in 2013.