Old Mutual SuperFund Financial Literacy programme aims to turn workers into savvy money managers
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Opinion by Malusi Ndlovu, Director of Large Enterprise Market at Old Mutual Corporate
South Africans’ struggle with soaring debt is well documented with various estimates ranging anywhere between 60% and 75% of workers take-home pay being spent on servicing household debt.
Earlier this year the SA Reserve Bank announced that debt to disposable income for South African households had increased to the current level of around 75%.
“Despite what we tend to believe, having more money or a higher income doesn't necessarily result in greater financial security,” according to Malusi Ndlovu, Director of Large Enterprise Market at Old Mutual Corporate. “This misperception directly impacts employers as employees seek higher-paying jobs to cope with debt and 'lifestyle creep' costing the company more in the long term.”
“The past 18 months have taken their toll on South African households. While some South Africans have had no choice but to go into debt, others have benefited from savings generated from 'stay at home’ orders,” says Ndlovu.
He notes that ‘lifestyle creep’ is when an employee’s standard of living typically improves with their salary or increase in discretionary savings, and former luxuries quickly become perceived necessities landing them into debt.
One solution to this problem is helping employees work better with their money by offering access to a financial literacy programme at work, Ndlovu says.
“To help overburdened South African households gain financial freedom, the Old Mutual SuperFund retirement umbrella fund offers members free financial education at no cost to the employer.”
The programme is designed to help members understand how to budget, how to manage debt, what to consider when buying a house, tax, salary structuring, retirement funds and estate planning and knowledge about the latest financial products out there, especially when needing to go on retirement.
As the participants get the basics right; they will be able to pay off the smallest debts; put a household budget together, and rearrange their spending so that they have some money to save – either towards retirement or a specific objective such as a child’s education.
“Holistic financial education is critical to helping members succeed. Offering retirement provision is only part of helping employees achieve financial security. It is also really difficult to convince members that they need to save for retirement while they are in financial difficulty. Therefore, being in a fund like the Old Mutual Superfund means that the employer partners with an expert who is focused on educating and communicating appropriately,” says Ndlovu.
“Smart money management means never spending more than you earn. We want to equip all members with the education, understanding and tools they need to make good financial decisions that transform their lives and enable them to achieve the futures they want.”
The training is held face-to-face, virtually and via online literacy programs.