Old Mutual Plans Collective Defined Contribution Launch in SA

In Short

Old Mutual Corporate plans to launch its Collective Defined Contribution (CDC) retirement proposition in South Africa in October.

The aim is to reduce “retirement timing risk”, the chance that market swings near retirement change outcomes for similar savers.

What Happened

Old Mutual Corporate says it will introduce its version of a Collective Defined Contribution proposition at an October thought-leadership forum in South Africa.

The update follows comments by Fred van der Vyfer, executive head of product solutions at Old Mutual Corporate, who argued that two people can save the same amounts for decades but retire with very different results. The difference can be as small as a month, depending on when they stop working, get retrenched, or start drawing an income.

This is “retirement timing risk”, the risk that you convert savings into income at the wrong point in the market cycle. It is similar to being forced to sell an asset when prices are temporarily low.

Van der Vyfer also questioned the common life-stage investing approach, where funds typically reduce risk as retirement nears. That approach often shifts more money into lower-volatility assets like bonds and cash, but it can still leave retirees exposed if a market shock hits at the wrong time.

CDC is positioned as a different design. It pools some risks across many members rather than leaving each person to manage the full impact alone. In plain terms, people share the “good and bad timing” outcomes, instead of each retiree facing the market on their own.

Why It Matters

For employers, trustees, and product teams, CDC is another attempt to improve retirement adequacy without relying only on higher contributions.

For retirees and near-retirees, the big issue is income stability. A retirement product that spreads timing risk could reduce the chance of cutting spending after a market downturn.

For South Africa’s broader financial services market, Old Mutual’s launch signals growing interest in retirement product structures that sit between traditional defined benefit plans (employer bears most risk) and defined contribution plans (member bears most risk).