Do you know whether you are on track to receive a reasonable pension? Do you know how much income protection your fund would provide if you were disabled tomorrow? Have you been meaning to change your retirement fund beneficiary form, but haven’t had time?
As retirement fund members, we are often hazy about the benefits that our fund provides and are slow to engage with the fund’s principal officer or its trustees to obtain information.
But imagine if you could access all the information you need via your smartphone, and you could use an app to change your beneficiary nominations or increase your contributions to your fund. One of the country’s largest umbrella funds, the Sanlam Umbrella Fund, recently launched an app for its members that does just that and more.
An umbrella fund is one set up by a large financial institution – usually a life assurer – as a retirement-saving vehicle for people who work for employers that don’t have retirement funds of their own.
Umbrella funds typically have more difficulty communicating with members than funds that serve the employees of a single employer, because the trustees, who are appointed by the life company (the sponsor), are typically not employed by the companies for which the members work.
The Sanlam Umbrella Fund has close to 170 000 members, who work for 4 000 employers across the country.
According to Derek Smorenburg, the chairman of the fund, it has the cellphone numbers of 82 percent of the fund’s contributing members, which makes communication via cellphone the logical way to reach members. In addition, the prevalence of smartphone ownership among members makes it possible to use apps to empower them.
The fund recently launched the Sanlam My Retirement App.
If you are a member of the Sanlam fund, you can download the app from Google Play or the Apple Store, but you need to register via the Sanlam website using either your Sanlam Umbrella Fund membership number or another Sanlam product account number.
Once you have the app on your phone or tablet, you can:
• View updated values of your retirement savings. Although it’s probably not a good idea to keep a beady eye on your savings daily, it is also not wise to put your head in the sand and not know that you have saved too little.
• Use your savings values in the retirement calculator to find out what percentage of your final salary your savings will provide as a pension (your replacement ratio) under three different scenarios: if investment returns are low, if returns are good, or if returns are in line with expectations.
• “Play” on the calculator with different retirement scenarios by increasing your contributions, retirement age, or group life cover and viewing how this will affect your retirement savings and life and disability cover. You can also see what difference this will make to your replacement ratio or income in retirement. If, after playing with the calculations, you decide to increase your contributions, the app facilitates you contacting your employer’s human resources department so you can implement the decision quickly and easily.
• View your group life benefits – an area about which many fund members are extremely hazy and a sorely neglected area of retirement fund communication. The app can help you to explore what your beneficiaries will receive if you die while in service, what you will receive if you are permanently disabled, or if you are temporarily unable to work. The app’s “Understanding my benefits” section has information about group life policies and when they will pay out. This crucial information will enable you to assess how much private life and disability cover you need to complement your group life cover. Many funds do not provide members with enough information about these benefits, and, because the fund is the policyholder, members can’t read the policy’s terms and conditions.
• Obtain information about where your retirement savings are invested. Members who are on the Sanlam Umbrella Fund’s comprehensive option can choose to invest their retirement savings in a wide range of underlying investment portfolios that comply with regulation 28 of the Pension Funds Act and are managed by the country’s leading asset managers. The app also allows them to read the fact sheets of any investment portfolios they may be interested in as well as other educational content.
• View the people you have nominated as beneficiaries if you die in service. You can view how you have asked the fund to distribute your benefits among your beneficiaries, but remember: your fund’s trustees are obliged to distribute your benefits equitably among your dependants and your nominees. (The Pension Funds Act requires that the fund’s trustees identify everyone who was factually or legally dependent on you and ensure they receive a benefit to meet their needs, before distributing the remaining benefits to the other people you have nominated).
• Find out what steps you, as a fund member, should take if you experience any life-changing events, such as getting a new job, getting married, the birth of a child, getting divorced or being disabled.
Online service
In addition to these features, Sanlam has launched an online service, known as Retiremate, that gives members the opportunity to speak to a retirement benefits consultant when they need guidance in their retirement planning. This service is available on the umbrella fund’s website.
Members of the umbrella fund who are approaching retirement can use Retiremate to obtain quotes for the annuities (monthly pensions) they can buy with their savings.
You should still get financial planning advice, but the service can also provide guidance on matters such how tax on retirement savings works, the importance of preserving your savings when you change jobs, and how you can preserve your savings within your fund.
The draft regulations under the Pension Fund Act, which were published last year, propose that funds be required to provide the services of a retirement benefits counsellor.
The service will also be made available to members of other retirement funds administered by Sanlam, if members pay for it.
Living annuity
The Sanlam Umbrella Fund offers members the option of buying a living annuity provided by the fund, with annual pension withdrawals of between 2.5 and 7.5 percent of the amount invested.
A fee of 0.1 percent a year is payable on the first R1.5 million of assets, with a minimum fee of R25 a month (excluding VAT). There are no other fees.
More retirement funds are providing what are known as in-fund annuity options following draft proposals from National Treasury suggesting that funds should be obliged to provide annuities to their members.
Most members are on their own when they have to buy a pension, but Treasury is of the view that funds have the financial muscle to obtain better annuity rates for their members.