AIMS gives industry lead on easier retirement savings
Absa Investment Management Services (AIMS), the specialist linked investments provider at Absa Investments, has called on the rest of its sector to follow its lead and make it easier for salary-earners to save for retirement.
AIMS has lowered its previous ceiling on monthly debit order contributions to retirement annuities (RAs) built on its linked investment platforms. It has also waived initial fees on debit orders.
Linked investment products or Lisps enable clients to link one or more selected unit trusts into a long-term savings and investment strategy, often supported by ongoing commitments through debit orders.
The mechanism enables broad choice and management of investment risk through diversification of asset classes or different types of unit trust. The selected funds can then be bundled into a retirement annuity customised to individual needs and risk profiles.
At AIMS, the minimum monthly investment via monthly debit order was previously R500 – a level that has become the industry norm. The new AIMS minimum is R250. Lump sum investments begin at R10 000, with minimum top-ups of R5000. The lower ceiling applies from mid-November.
As well as end-of-month debit orders, clients are now allowed to opt for debits on the 10th and 17th of the month. From next March, investors will be able to choose any date during the month for their debit orders to be deducted from their bank accounts.
“We are concerned about the low rate of retirement saving among South Africans,” said AIMS general manager Mark Kitching. “We decided something had to be done to make it easier and more affordable for investors to start making additional provision for retirement.
“Lisps are an extremely flexible form of investment. So while lowering the ceiling we decided to be as accommodating as possible on debit order timing.
“Hopefully, other retirement product providers will follow suit as lack of proper retirement provision is cause for concern across our industry.”
AIMS reviewed its approach to debit orders following the roll-out of the new Absa Investments positioning statement ‘You’d be surprised what you can accomplish when you start with what you’ve got’.
“It’s an empowering message,” said Kitching, “and it is important to get behind it by helping consumers get started with whatever they have available.
“In an area like retirement provision, making a start with even a small regular sum is much better than not starting at all. We’ve lowered the barrier to entry-level saving via RAs and hope South Africans get the message that every little bit helps.”
