“It wasn’t raining when Noah built the Ark.”

This saying, inspired by one of the most popular Biblical stories, is a reminder of the undeniable value of planning ahead. Employers, in building out a culture that prioritizes the current and future wellbeing of employees, must endeavor to plan ahead in supporting their team’s readiness for a successful retirement.

Employees who are confident in their knowledge about their own financial standing and the security of their retirement plans will be less stressed, more productive, and more positive about their future with your company. It is therefore important that business and human resource leaders create a plan around continued engagement that helps young and mature members prepare for their retirement goals.

Help Members Understand their Pension Benefits

• Host meetings with pension fund members after the dispatch of annual member statements to discuss the benefits of their pension fund, including how their pension is calculated and their projected pension at normal retirement date.
• Encourage pension fund members to pay special attention to the replacement ratio.

Host Pre-Retirement Sessions with Members

• Collaborate with relevant entities to host pre-retirement seminars, which allow persons within 10 years of retirement age to discuss pension and health benefits provided by the Government and their company-sponsored pension fund, as well as savings and investment options and general wellness.

• Have one-on-one discussions with members at least six months prior to their normal retirement age to provide them with an estimate of the pension amount they would receive in retirement. This will allow members to better prepare for their retirement years.

Encourage Members to keep Pensions Contributions in the Fund when separating

• When employees, who are members of a company-sponsored pension fund are separating from their employer, they should be encouraged to leave their pension contributions in the pension fund, if the pension funds rules allow, so that they will have a benefit to receive once they attain pensionable age.

• Vested members, that is, members who have accumulated the pensionable service (e.g. five years) stipulated by their pension fund’s rules and are entitled to receive a pension benefit from the pension fund, are especially encouraged to leave their contributions in the pension fund.

Honing a culture that supports your employees in future financial planning and retirement readiness is worth the effort, for the long-term wellness of your team and for the success of your company. This approach will save valuable resources, secure talent and expertise and reduce unnecessary employee turnover.

Take the necessary steps. Review your approach to retirement readiness, craft a plan of action and get ready to communicate with your team.

WHY IS THE REPLACEMENT RATIO IMPORTANT? Indicates the percentage of your pre-retirement salary that will be replaced by your pension.Generally, it is good to aim for a minimum of 80% replacement ratio to maintain your pre-retirement standard of living.Increase your replacement ratio by making the maximum contribution allowed, that is, total contribution rate made by you and your employer must not exceed 20% of your pensionable salary.  

WHAT ARE YOUR EMPLOYEE’S MAIN SOURCES OF INCOME IN RETIREMENT?   Pension via Approved Superannuation Fund or Approved Retirement SchemeNational Insurance SchemePersonal savings and investments