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Cape Town - Thousands of South Africans, who qualify for pension benefits have not claimed money that’s owing to them, according to the Financial Services Board (FSB).
This is just one of a number of signals that suggest many pension fund members don’t know their rights and risk losing out financially as a result.
The Institute of Retirement Funds (IRF) has called for drastic measures to ensure members are kept up-to-date regarding how their pensions are performing.
While funds have a clear responsibility to perform satisfactory administrative and communications functions, the member nevertheless needs to be vested in the affairs of their own pension fund.
Failing this, severe shortcomings and subpar outcomes at retirement will prevail.
Sadly for many, the realisation that their retirement savings won't be enough to sustain their lifestyle comes too late.
According to MD of Redwood Unlimited Financial Services, Dante Sinibaldi, members generally need more information to feel comfortable about their savings.
“Active involvement at board of management representation level and at annual member training and feedback sessions (that the employee benefits FAIS licensed advisor should be conducting) will provide further insight into the member’s share of fund and assist with their personal financial planning for their retirement,” he said.
Members are urged to ask questions and acquire as much knowledge around their pensions as possible.
While some financial planners and funds are far more proactive and innovative than others in terms of their customer service and member communication, members must know their basic rights.
Liberty’s De Wet van der Spuy, divisional director: products, said funds should make members aware of retirement fund roadshows, forums and also provide communication that helps members better understand their own retirement fund.
It’s then up to members to actually attend these knowledge-building events and read the communication provided.
Basic functions a member should be receiving from a fund:
- A scheme booklet upon joining the fund;
- Benefit statements and investment updates, at least annually, but preferably more regularly;
- If changing jobs or leaving the fund, a member should receive full disclosure of the value of their benefits, which the member can take or defer to retirement;
- Regular information on investment options available to the member;
- Upon retirement, a member should be given full disclosure of the value of their benefits, tax deductions and options;
- Importantly, a member has full right of disclosure from their pension fund at any given time, especially regarding the performance and financial condition of their pension fund.
Van der Spuy emphasised the importance for members to monitor their projected income at retirement, throughout their career, in order to plan accordingly.
He also warned that fees and expenses can eat into retirement savings, so members need to monitor this, with the help of a financial advisor.
Zamani Letjane, chairperson of the IRF, expressed an emphatic plea to South Africa’s retirement industry to do all it can to raise awareness of the need to better prepare for retirement.
Letjane believes an attitudinal change is needed and says, “It is time to embark on a concerted awareness raising campaign on personal savings that goes beyond mere correspondence to the members.
It is time that trustees and all stakeholders seriously consider the wider establishment and promotion of complementary savings avenues such as additional voluntary contributions (AVCs) to boost retirement savings.
It may be far more efficient and cost-effective to supplement retirement savings through existing pension schemes, especially for those who are in a position to do so”.
While retirement funds have an obligation to fulfill fundamental administrative and informative functions, members too have a vital role to play.
Knowing their rights, ensuring their funds are servicing them adequately and also adopting a proactive, responsible attitude towards retirement will enable them to view the steady increment or decline of their savings, and make timeous changes where necessary.
This is just one of a number of signals that suggest many pension fund members don’t know their rights and risk losing out financially as a result.
The Institute of Retirement Funds (IRF) has called for drastic measures to ensure members are kept up-to-date regarding how their pensions are performing.
While funds have a clear responsibility to perform satisfactory administrative and communications functions, the member nevertheless needs to be vested in the affairs of their own pension fund.
Failing this, severe shortcomings and subpar outcomes at retirement will prevail.
Sadly for many, the realisation that their retirement savings won't be enough to sustain their lifestyle comes too late.
According to MD of Redwood Unlimited Financial Services, Dante Sinibaldi, members generally need more information to feel comfortable about their savings.
“Active involvement at board of management representation level and at annual member training and feedback sessions (that the employee benefits FAIS licensed advisor should be conducting) will provide further insight into the member’s share of fund and assist with their personal financial planning for their retirement,” he said.
Members are urged to ask questions and acquire as much knowledge around their pensions as possible.
While some financial planners and funds are far more proactive and innovative than others in terms of their customer service and member communication, members must know their basic rights.
Liberty’s De Wet van der Spuy, divisional director: products, said funds should make members aware of retirement fund roadshows, forums and also provide communication that helps members better understand their own retirement fund.
It’s then up to members to actually attend these knowledge-building events and read the communication provided.
Basic functions a member should be receiving from a fund:
- A scheme booklet upon joining the fund;
- Benefit statements and investment updates, at least annually, but preferably more regularly;
- If changing jobs or leaving the fund, a member should receive full disclosure of the value of their benefits, which the member can take or defer to retirement;
- Regular information on investment options available to the member;
- Upon retirement, a member should be given full disclosure of the value of their benefits, tax deductions and options;
- Importantly, a member has full right of disclosure from their pension fund at any given time, especially regarding the performance and financial condition of their pension fund.
Van der Spuy emphasised the importance for members to monitor their projected income at retirement, throughout their career, in order to plan accordingly.
He also warned that fees and expenses can eat into retirement savings, so members need to monitor this, with the help of a financial advisor.
Zamani Letjane, chairperson of the IRF, expressed an emphatic plea to South Africa’s retirement industry to do all it can to raise awareness of the need to better prepare for retirement.
Letjane believes an attitudinal change is needed and says, “It is time to embark on a concerted awareness raising campaign on personal savings that goes beyond mere correspondence to the members.
It is time that trustees and all stakeholders seriously consider the wider establishment and promotion of complementary savings avenues such as additional voluntary contributions (AVCs) to boost retirement savings.
It may be far more efficient and cost-effective to supplement retirement savings through existing pension schemes, especially for those who are in a position to do so”.
While retirement funds have an obligation to fulfill fundamental administrative and informative functions, members too have a vital role to play.
Knowing their rights, ensuring their funds are servicing them adequately and also adopting a proactive, responsible attitude towards retirement will enable them to view the steady increment or decline of their savings, and make timeous changes where necessary.
