The recent OMAC Actuaries & Consultants Member Retirement confidence Index (MeRCI) for 2011 has revealed that confidence levels among members of retirement funds in South Africa have declined over the last year.
The MeRCI is an indication of aggregate confidence levels that occupational retirement fund members have in their funds to deliver a satisfactory retirement. Confidence levels are measured on a scale of 1 to 10 (where 1 is extremely unconfident and 10 is extremely confident). The 2011 MeRCI recorded a confidence level of 5.8, marking a decline from 2010’s figure of 6.1.
According to Craig Aitchison, MD of OMAC Actuaries & Consultants, a number of factors are taken into account in calculating the MeRCI. These include members’ trust in various aspects of a retirement fund, knowledge and understanding of their funds and finally, their engagement and activity within their funds. “We believe that this assessment provides a very real view of member confidence in their retirement funds,” he says.
Aitchison warns that because there have been onlytwo measures of this survey, it is still too early to tell if this is a continuing trend, however, it is possible to isolate areas of improvement and decline over the year.
Factors that have shown a decline from last year include additional savings put into retirement funds, member participation in trustee elections, understanding of how retirement fund assets are invested and which investment managers are being used. Furthermore, Aitchison says, members indicated a growing dissatisfaction with communication.
“The areas of decline indicate a growing gap in communication which seems to be leading to a dwindling desire among members to engage with their funds. While we cannot tell if this is a downward spiral of confidence levels, it is clear that member engagement, understanding and satisfaction with communication remain challenges for the retirement industry as a whole,” he says.
On the other hand, the results of this MeRCI indicated a slight improvement in satisfaction with current retirement planning and provision and trust in their fund’s ability to provide in retirement, death or disability. Confidence and trust in trustees, the administration of their fund and in trustee management of fund investments also improved slightly. A further improvement noted in pensioner satisfaction.