This offers employees a sense of immediate value, as they can experience the benefits of their savings throughout their lives.
The solution could be employer-driven, member-driven, a stokvel-type model or a combination of these.
Employers have a key role to play in the overall well-being of their staff, which bring benefits to the employees and employers. Employers can demonstrate this via an employer-driven solution.
For example, Company A decided to use retirement savings to provide an emergency savings plan for its employees.
The aim is to build up short-term savings (to deal with emergencies) without sacrificing retirement income objectives. The way it achieves this is by reducing retirement savings for younger members of the retirement fund.
A portion of their contribution to the fund is redirected to an emergency savings plan. Over time, the accumulated savings in the emergency savings plan will grow.
To make up for the lower contributions members make to the retirement fund when they are young, their retirement savings contributions automatically increase as they get older.
Prinsloo said this could be done at salary increase time to limit the immediate financial impact on take-home pay.
This practice helps to put the member in a neutral or better financial position at retirement, while having access to savings during their working lives when the need arises.
The benefit of an employer-driven model was that it could be provided as a default solution, with the choice to opt out.
The employer determines the savings level and makes payments through the payroll system. This approach alleviates employee apathy, ensuring more of their needs are met during their lives. They will have amassed short- and long-term savings and will have developed a savings habit.
This is the sort of solution employers need to implement to assist employees through the savings journey and it recognises the need for access to emergency savings.
Michael Prinsloo is the managing executive of research and product development at Alexander Forbes.