Retirement fund industry shake-up should bring extended coverage and enhanced benefits

National Treasury’s anticipated report on costs in the retirement fund sector will go a long way towards improving transparency in an industry in need of reform.

That’s according to William Moutloatse, CEO of Novare Actuaries & Consultants, the independent implemented consulting business that provides specialist support to institutional clients in Southern Africa.

“Costs have a major impact on the benefits accumulated in retirement funds on behalf of and by members. As a result, we welcome the announcement that the National Treasury is working on a paper on costs in the retirement industry.

“This document should make a useful contribution to the overall reform process outlined in the discussion document released by the Treasury in May,” Mr Moutloatse said.

He added that transparency was a major issue, with complex products and obscure charges common problems.

Other aspects being looked at as part of the industry reform process are a proposed mandatory statutory fund intended to extend the retirement savings net to include many more people, tax incentives, and preservation.

Mr Moutloatse said that, with some 3 000 funds in the industry, there was room for consolidation, which would provide opportunities for synergy, reduced costs and more effective risk pooling.

“Considering the extent to which people fall outside of the retirement savings net completely, as well as the fact that the majority of those who do make provision still fall far short of their pre-retirement standards of living, there is a clear need to increase savings levels while reducing costs and duplication.”

Mr Moutloatse added that the simplification of products would enhance their cost effectiveness, and better communication would go a long way towards improving the lot of members, for whom the industry exists.

“That said, there is a need for flexibility in the system to also accommodate self-employed people and earners across the income spectrum.”

Mr Moutloatse said Novare Actuaries & Consultants’ implemented consulting model assisted in containing costs. “Our expertise in advising clients and boards of trustees on a wide range of complex issues has been built over many years. We believe we are at the forefront of innovation and will continue to develop solutions that are suitable to the different needs of clients”.

“The firm’s professional support extends throughout the investment process, from the initial advisory stage through to execution and on-going monitoring.”