Can South Africans afford to move to a preservation fund in light of increasing costs?

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The minister announced that “Retirement funds will be required to identify appropriate preservation funds for exiting members, who will be encouraged to preserve when changing jobs.”  The question that arises is whether the average South African can afford to save/retain the money placed into retirement funds (via movement into a preservation fund) as opposed to withdrawing the money in order to subsist.
According to the Income and Expenditure Survey (IES) 2010/2011 released on 6 November 2012 by Statistics South Africa, the average South African household expenditure increased by 69.5% over a five year period. 

The average annual household expenditure across the various population groups ranged from R55 920 to R314 524 per annum (total average of R95 183 per annum).  Unfortunately, the 2012 IES figures have not been released as yet, however it was stated in the IES that at constant 2011 prices, they foresee a real increase in spending of 24.6% or approximately R18 779 per annum.  Stats SA maintain that the main components of this expenditure “remain housing (including water, electricity and other utilities), transport, food and miscellaneous goods and services...” 

In particular, individuals who are retrenched are more likely to withdraw from their pension/provident funds in order to pay their day-to-day living expenses including debt as circumstances do not afford them the luxury of moving their money to a preservation fund.

Some may argue that the tax-free component of R315 000 for the retrenchment severance pay combined with the retirement fund withdrawal is generous.  However, for an average household, the R315 000 is likely to last less than 2.5 years.  Using the statistics from the IES, for some individuals, this amount could last less than a year.   

In light of the above and the predicted year on year increase in household expenditure of approximately 24.6% per annum, perhaps the Minister should have considered adding further tax relief for individuals who will be retrenched in the upcoming months.