Lindiwe Sebesho, Managing Director of Remchannel and Blessing Utete Managing Executive at Old Mutual Corporate Consulting
The first few weeks of the implementation of the Two-Pot Retirement System have confirmed the financial strain that working South Africans are under. The new system, which came into effect on 1 September, requires retirement fund members to preserve two-thirds of their future savings until retirement while allowing early access to up to one-third of their future savings – with a seeding amount of up to R30 000 available immediately.
Ahead of the implementation of the Two-Pot System, Old Mutual expected its clients to withdraw an estimated R14.2 billion from their retail retirement products and occupational schemes. “We weren’t surprised at the volumes of claims,” says Blessing Utete, Managing Executive at Old Mutual Corporate Consultants. “But what is interesting is that claims are coming from retirement fund members across all ages and all income groups. It’s a clear indication of the limited financial wellness that’s in the market at the moment. All South Africans are under financial pressure, and they need support.”
Remchannel’s Managing Director Lindiwe Sebesho agrees. “We now have five generations in the workforce, from the Silent Generation who are approaching retirement to Boomers, Generation X, Millennials and Gen Z,” she says. “Each generation represents a different life stage, and each has its own set of needs. But what’s clear is that every generation – and every employee – needs their employer to see them as a whole person and enable their financial well-being through tailored pay and benefits solutions.”
Utute believes that the Two-Pot claims volumes are “a wake-up call for employers”. “Employees do not have emergency savings, which is why they’re accessing their retirement savings – despite the long-term damage it does to their retirement outcomes,” he says. “It also highlights the need for flexibility in employee benefits. Again, let’s look at retirement savings. As an employer, how do you encourage an employee to contribute 15% of their salary towards their retirement when they can’t make ends meet today? You have to be in touch with where people are at, and you must empower them to make the changes they need to make as they move along their journey.”
“It’s important to consider the person’s ability to save at a level which is appropriate for their circumstances,” says Sebesho. “Provide the support, provide the advice, and then empower them to make the right decisions for today and tomorrow.”
It’s a complex problem and delicate balancing act – and one that Old Mutual Corporate Consultants and Remchannel are helping organisations navigate with Talent Vantage™. Talent Vantage™ combines cutting-edge remuneration insights from Remchannel with Old Mutual Corporate Consultants’ extensive experience in employee benefits, enabling organisations to transform how they reward talent.
In a tough economic environment, employees often face urgent and immediate financial pressures. Talent Vantage™ helps organisations to address their employees’ short-term financial needs by setting competitive pay packages based on remuneration benchmarks that are crafted to relevant industry and national standards. This helps companies to remain efficient while attracting top talent.
“Flexible pay is another consideration,” says Sebesho. “This involves providing options like on-demand pay (subject to financial education), where employees can access earned wages before payday to help alleviate financial stress. Debt management support is part of this, helping employees to manage their debt before it spirals out of control.”
Employees also need to effectively manage their long-term financial health. Here, Talent Vantage™ helps companies craft strategies such as enhanced retirement plans, which encourage employees to save for the future in line with their life stage, while protecting themselves from unforeseen life events.
“We also assist companies in structuring short- and long-term incentive plans that are linked to both individual and company performance, aligning the employees’ interests with the long-term success of the business,” says Sebesho. “And all of this is supported by financial wellness programmes that provide financial education and resources on budgeting, investing, and debt management. This empowers employees to make informed financial decisions now and for the future.”
Each of these elements forms part of a holistic employee value proposition (EVP) that helps organisations attract and retain top talent. “As Remchannel, we advise our clients to consider their EVP as a complete offering,” says Sebesho. “Remuneration and employee benefits are not separate things. We certainly don’t see them that way – and neither do employees! They’re part of one continuum that employers can structure carefully to attract and keep the best employees.”
“Employee benefits have been too siloed and paternalistic for too long,” adds Utete. “The world has moved to where Talent Vantage™ is, where employee benefits and remuneration packages are structured with the big picture and the needs of all parties in mind.”
Sebesho emphasises that while an integrated approach to remuneration and employee benefits is important for employees, it’s also vital for businesses.
“From a corporate employer perspective, it’s about making sure your employees are rewarded appropriately while also managing your costs, and ensuring compliance to various employment which are a big element of your duty to your shareholders,” she says. “Finding that balance is important because any decision you make will impact other elements of your business, including investor confidence. Our aim with Talent Vantage™ is to help employers appreciate the overall value proposition by bringing innovation and flexibility that enables them to meet today’s needs while saving for tomorrow’s financial security and looking after what happens in between in a responsible manner.”
Find out more about Talent Vantage, a collaboration between Remchannel and Old Mutual Corporate Consultants by clicking here.
ENDS
