Good communication with members will help ensure the sustainability of retirement funds, Ian Maron, the managing director of Liberty Corporate Benefits, says.
Maron was speaking this week at the Institute of Retirement Funds' Communication Awards ceremony. The event is jointly sponsored by Liberty Corporate Benefits and Personal Finance. The awards recognise excellence in communicating with fund members.
The retirement fund industry in South Africa is a significant industry in terms of size, both of assets and membership. It represents the largest and, in some cases, the only long-term savings of the South African work force.
Maron says the past year has seen far-reaching regulatory changes, including:
- The publication of the regulations for surplus distribution;
- The potential removal of the audit exemption, which will have a major impact on 12 000 funds and five million members, as a result of potential additional costs;
- New foreign investment requirements that will benefit only a few large funds and probably deny most smaller funds any foreign exposure, even possibly forcing them to sell their foreign assets at current levels;
- The trend of smaller funds to go into umbrella funds, but umbrella regulation is in the pipeline;
- A new Pension Funds Act, which may result in the introduction of new retirement saving vehicles; and
u New moves which may lead to a government-sponsored social security system and could impact on retirement funds.
"Add to all this an extended bear market, and the retirement fund industry risks becoming unattractive and too uncertain to sponsoring employers, members and administrators," Maron says.
He says that members, the primary stakeholders, want decent benefits; benefit expectations to be met; sufficient information to understand their benefits; and to feel empowered by this understanding and not dependent on a paternalistic employer.
"Sadly, unless we get this right, the eventual impact may be less retirement saving."
Maron says that for the retirement fund industry to thrive, it must:
- Simplify the management of funds; and
- Ensure that all stakeholders feel that funds are adding value.
In achieving this, effective communication with members is required.
He says Liberty Corporate Benefits, the retirement fund business unit of the Liberty Group, wants to encourage transparent and excellent communication to all retirement fund stakeholders.
And the winners are:
- Initial communication category
(large funds):
University of Cape Town Retirement Fund.
- Special projects communication category (large funds):
First: DeBeers Pension Fund.
Second: Old Mutual Staff Retirement Fund.
Merit award: Cape Joint Retirement Fund.
- Umbrella funds category:
Selector Umbrella Pension & Provident Fund.
- General communication category
(large funds):
First: Debswana Pension Fund.
Second: DeBeers Pension Fund.
Third: Iscor Selector Umbrella Pension Provident Fund.
- General communication category (medium funds):
Predikante Pensioen Fonds.