Retirement fund members upbeat

Johannesburg - Members have a degree of confidence in their retirement funds, but there is still room for improvement.

This is the finding of Old Mutual Actuaries & Consultants' (Omac's) first Member Retirement Confidence Indicator (MeRCI) released on Wednesday.

According to Omac, the MeRCI is calculated based on 16 different factors.

"These factors cover how members feel about various aspects of their funds and the extent to which they believe their fund will meet their benefit needs, as well as how the needs of current pensioners have been met."

The scores for the 16 factors are averaged to give an index value from one to 10, where one means extremely low confidence and 10 means extremely confident.

The 2009/10 MeRCI, which was based on data collected in late 2009, recorded an overall score of 6.1.

This showed that "members do have a degree of confidence in their retirement needs being met through their funds but that there is still room for improvement."

The individual questions posed to retirement fund members showed that they had a high level of confidence in trustees, even though many did not actually know who they were, where their money was invested or whether they were on track to have enough in retirement.

Omac MD Craig Aitchison said specific areas that could be targeted for improvement included helping members gain a better understanding of their actual financial needs as well as what their funds aimed to provide.

He said there should be more transparency on how the retirement fund would achieve the desired level of investment returns.

Another area for improvement was greater ownership by members of their retirement savings, as members bore the risk of insufficient benefits.

"This may also lead to higher participation by members in their fund."

Aitchison said there should be continued focus on encouraging preservation.

"Lack of preservation is a key driver of members reaching retirement with insufficient benefits," he said.

- Sapa