By TKay Nthebe
Retirement experts encourage people to plan and save for their retirement, where the recommendation is to start saving early and be consistent so you can achieve the retirement income replacement ratio. While some follow these recommendations, many people do not know what their responsibilities are as members of retirement funds, leaving their retirement planning to employers or Board of Trustees (BOT).
In this week’s article, I will discuss four responsibilities that members of retirement funds should know.
- Set a retirement goal
A mistake members make is not defining their retirement goal – how much would you like to retire on? To successfully plan and retire financially secure you need to have a clearly defined retirement goal. A well-defined retirement goal influences how much you need to save for retirement, where the experts suggest that you need to save 15% of your pre-tax income to achieve the 75% retirement income replacement ratio. If your goal is to retire on a higher income replacement ratio of 86% for example, you will need to contribute more than the default to achieve this.
- Know the rules of the fund
Retirement funds i.e., pension or provident have rules that govern how the fund operates. The rules outline the type of fund, the power BOT have, roles, and responsibilities of members. The rules also require that funds have policies for example communication and investment policies, outlining how communication will be done and where funds will be invested. Knowing and understanding these rules will empower you to ask the right questions about the fund, its performance and hold the BOT accountable.
- Review your benefit statements
The Pension Fund Act of 2019 requires that retirement funds provide its members with benefit statements annually. A benefit statement is a summary of how much has been accumulated from contributions, the fund’s performance, and risk benefits such as disability, funeral, or death. Reviewing your benefit statements helps you determine and track how far you are from your retirement goal mentioned above. If you are behind, a benefit statement enables you to make the necessary changes or increase voluntary contributions etc.
- Nominate your beneficiaries
A BIG mistake members make is not completing or updating beneficiary nomination forms. As a member, you have a responsibility to ensure that you complete and regularly update the list of your nominated beneficiaries. By so doing, you have control of how your retirement benefits will be distributed in the event of death.
Planning for your retirement is NOT the responsibility of your employer or BOT. You are also not too young to start planning for retirement. Let’s educate and empower ourselves as members of retirement funds to ensure our retirement planning needs are taken care of.
If you haven’t started saving for retirement, do not be disheartened – “hopola hore ha li na motloha-pele”. You can get more information and tailored solutions that suit your retirement funds by visiting the Alliance Umbrella Fund.
