• Katherine Barker

New retirement fund default regulations to improve members’ financial decisions

South African retirement fund members are overwhelmed by countless options – from choosing an investment portfolio during their working years, to when they change jobs and need to preserve their retirement savings, and at the time of retirement when they need to choose an annuity that will sustain them for the rest of their retired life.

This is the belief of Katherine Barker, Head of FundsAtWork at Momentum Corporate, who welcomes the implementation of the new retirement fund default regulations set for 1 March 2019, when retirement funds will be required to ensure that members receive benefit counselling to provide information and assist them in making appropriate decisions to enhance their retirement outcomes.

“Our research shows that many members of the retirement funds we administer do not have a personal financial adviser and, as such, their only access to financial advice is through their scheme’s financial adviser. The retirement benefits counselling service will be of tremendous value to these members,” says Barker, who formed part of a panel of experts at the Masterclass held by Asset TV to discuss the new regulations affecting default annuity strategies and Retirement benefit counselling.

Retirement benefit counselling can be instrumental in delivering better outcomes, says Barker, who believes this is certainly a step in the right direction. “One of the ways it will improve outcomes is by empowering members with relevant information at key decision-points, such as resignation or retirement.

“However, to be able to make informed decisions at these critical stages of a member’s life, they also need access to simple and easy-to-understand information on their benefits. This is exactly what benefit counselling will aim to achieve. By providing an opportunity for funds to engage with members not only on fund benefits, but also to lift the overall level of financial education of members, this counselling can cover a variety of topics relating to finances,” continues Barker.

She believes that the benefit counselling will complement Momentum Corporate’s existing efforts to assist retirement fund members to make better financial decisions. “Since 2016, we introduced a range of ‘smart solutions’, including Smart Exits, Smart Retirements and Smart Counsel to empower member decision-making through all the various critical stages of retirement saving.”

Smart Exits, Barker explains, reduces members’ temptation of taking their retirement savings as a lump sum and spending it when they change employers, instead of preserving it for when they retire. “Smart Exits includes interactive scenario analysis that shows members alternatives to help them realise the impact on their retirement outcomes if they choose to take their retirement savings as a lump sum instead of preserving it.

“Smart Retirements then assist members, and especially retirees, by educating them on the different annuity products available, providing easy-to-understand, jargon-free explanations, and connecting them to the Smart Counsel team if they have questions or get stuck, or a financial adviser for personalised advice where necessary.”

Financial advisers play such a critical role, says Barker and with sessions such as the Masterclass, financial advisers are able to gain knowledge (and also improve their CPD points).”

A good retirement fund solution needs to enable financial advisers to deliver their “best of advice” solution for a particular client, Barker notes. “We envisage a complementary partnership between retirement benefits counselling and the financial adviser delivering financial advice. By improving members’ financial literacy and creating a better understanding of benefits and the consequences of certain choices, we trust that the counselling service will free up financial advisers to focus on where they deliver the greatest value which is the provision of professional advice,” she concludes.


About Momentum:

Momentum Corporate:

Momentum Corporate is the division of MMI Group Limited within the JSE-listed financial services group MMI Holdings, that engages with large and medium sized businesses to help businesses and their employees on their journey to success. Momentum Corporate offers a holistic range of employee benefit solutions such as retirement, insurance, health and workplace risk management solutions.

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