Talking about the 2014 financial results, Principal Officer Kai Friedrich said investments held by the Fund’s members grew by N$285 million during the 2014 financial year, and the Fund had assets of N$1,566 billion under management for more than 8,300 members.
Of the 8,300, Friedrich said, approximately 300 are individual members and approximately 8,000 are members under participating employer groups. The Fund had 110 pensioners who received about N$11,6 million in pensions during the year. Benefit payments, including withdrawals, resignations, retirement lump sum payments and conversion of member shares into pensions amounted to N$295 million.
At the event the role of employers in assisting employees to attain financial well-being was highlighted by Viresh Maharaj, Chief Marketing Actuary of Sanlam Employee Benefits in South Africa. He pointed to the fact that many employees will not be able to retire with a comfortable income due to cash withdrawals from pension savings upon changing jobs. Factors which further compound the issue are use of pension investments to reduce debt and poor management of the transition of an employee from one employer pension fund to another.
He made the point that employees are often not adequately informed of the consequences of leakage when making withdrawals from pension funds. To illustrate the point he used the example of taxation of at least N$200,000 on a withdrawal of N$1 million from a pension investment. He said that employees are often not aware of the taxation on the withdrawal. He said that the amount of taxation paid of N$200,000 could have appreciated to N$1,4 million at retirement had it remained invested at approximately 10% over 20 years, a factor that would materially influence the decision to preserve a pension investment on change of employment.
Maharaj argued for a more responsible role for human resource management in counselling employees on their financial well-being, as well as inclusion of financial skills in employee wellness initiatives.
Maharaj said that financial stress contributes to lack of focus in the workplace on the part of employees, as well as absenteeism. Employers’ concern for financial well-being he said, and the resulting financial wellness of employees improves morale and productivity, and becomes a competitive advantage for the employer.
Danie van Zyl, Head of Guaranteed Investments of Sanlam Employee Benefits, noted the trend of smaller employers switching to umbrella funds rather than utilising stand-alone funds, citing economies of scale in umbrella retirement funds as one consideration. Another reason to move is that the employer carries less fiduciary responsibility in an umbrella arrangement.
At the same event, Kai Friedrich noted that retirement savings of about 12,5 times the annual income of the retiree should have built up at age 60 for a financially secure retirement.