Meaningful employee financial literacy requires going beyond default regulations

10 June 2019 Momentum Corporate

The default retirement fund regulations introduced in March this year are aimed at supporting members of retirement funds to make better decisions at various points during their working lives, ultimately helping them to be financially independent when they retire. Intended as an important enabler of this is the introduction of compulsory benefit counselling services, which need to be offered to retirement fund members by the fund.

While it is still early days in terms of the default regulations, the facts speak for themselves and emphasise why simply ticking regulatory blocks is not enough for the financial service industry:
• Nearly 25% of members don’t know they can preserve their retirement fund benefit when changing employers.
• Two out of every five people surveyed are not familiar with industry investment terms and the average member is uncomfortable to explain the meaning of these investments related terms.
• Two out of every five people are unfamiliar with terms such as underwriting, umbrella fund and pensionable salary.[1]

Echoing this, the Momentum/Unisa Consumer Financial Vulnerability Index for the last two years shows that South African consumers’ finances remain under severe pressure. “The Index also found that a key driver of this continued vulnerability is lack of financial literacy. The longer consumers’ personal finances remain under pressure, the harder it will be to recover,” said Ronelle Kind, General Manager of Member Engagement Solutions at Momentum Corporate. Therefore Momentum Corporate launched a first of its kind face-to-face member benefit counselling event held in Sandton on 4 June 2019.

“We believe that our industry needs to go beyond the legislative requirements to meaningfully address the illiteracy issues in South Africa,” said Kind.

She believes that in order to do this, benefit counselling needs to take the form of a multi-channel approach that caters for a changing workforce. “We have developed a multi-channel strategy to maximise benefit counselling for our FundsAtWork Umbrella Fund members. Our objective is to effectively partner with members, their employers and financial advisers on the members’ journey to financial success,” added Kind.

A core component of the omni-channel strategy, and one which supports members’ need for face-to-face engagement, is the FundsAtWork Umbrella Funds Member Conference.

Six face-to-face conferences were held in Durban, Johannesburg and Cape Town and members who could not attend the various sessions could tune into the live webcast. Local presenter and comedian, Dr Riaad Moosa was the master of ceremonies in all six sessions. Topics included dying without a valid will and how this impacts your family, choosing the best annuity for your needs and how to start planning for retirement, even if you start later than expected. The highly interactive forum gave members an opportunity to ask questions and engage with various presenters throughout the session.

Going beyond what is required legislatively has clearly been well received by members. “We have been overwhelmed by our members’ response to the sessions and really believe that we are on the right track,” says Kind. The conference content is available for anyone to access on the following links: and

When asked about the role of the financial adviser versus the benefit counsellor, Kind explained that a key component of Momentum Corporate’s benefit counselling strategy is the role of the benefit counsellor in relation to the scheme’s financial adviser. “We believe that the role of a benefit counsellor should be to assist members to understand their financial situations better including their FundsAtWork benefits, this will ensure better outcomes for members over the long term”.

“Once members are well-informed and need to make financial decisions they should then speak to their financial adviser. This will ensure that the scheme’s financial adviser focuses on providing best-of-advice solutions at group level while having the peace of mind that members are being supported to make smart financial choices during key phases of their working life,” says Kind.

Kind also points out that a multi-channel benefit counselling approach improves employee engagement, financial literacy and ensures that employees understand and appreciate the benefits available to them. Over time this will reduce employee apathy. “We want members to have the right information, at the right time to make the right decision for their personal journey to success,” says Kind.

“Getting our model right has meant really understanding who we’re talking to, which resulted in our multi-faceted communication approach – digital, face-to-face and telephonic. Our research shows that millennials, participants between the ages of 25 and 34, make up 52% of the workforce. Over time, this number is going to grow and then we’ll also be dealing with Generation Z!

“When looking at employee benefits, we have to apply a generational filter to understand the different dynamics that exist and how each generation wants to consume the information we want to share,” says Kind.[2]

“We’ve spent a lot of time understanding the changing workforce and the issues at play and are delighted with our proposition. This journey has begun, it’s exciting and rewarding to see the impact we’re already having since the new default retirement fund regulations were introduced. We hope that the industry will follow suit to ensure that all South Africans can reach retirement day financially informed and prepared,” concluded Kind.

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