“As a member of the millennial generation, and having had substantial exposure to the retirement fund industry as an employee benefits consultant, one thing has always been abundantly clear – this is an industry full of unnecessarily over-complicated jargon,” says Mark Swanepoel, Senior Associate, Axiomatic Consultants. “Those who do not understand it tend not to ask questions and hope that their Trustees/Management Committee is doing what is best with their monthly retirement fund contributions.”
Contributions, particularly by low income earning millennials, are often simply seen as compulsory salary deductions towards their employers’ retirement fund, and not seen as part of the employer’s value proposition. “This is evidenced by the typical answer to an important questions for members, namely; ‘How often do you log onto the online member portal to check your fund credit and expected replacement ratio?’ The answer is invariably – never,” continues Swanepoel.
The begging question is; ‘who would willingly pay money every month, whether ‘forced’ to or not, and not ensure that their money, which is part of their package, is benefiting them?’ Yet when employees’ net pay changes by a little as R50.00 they tend to immediately raise a query with HR or their payroll department.
Is it because members trust their funds and the retirement fund industry with such conviction that there is absolutely no desire to check where a percentage of their salaries is going?
“From the many interactions I’ve had with retirement fund members, it is clear that the answer to this question is less about trust and more about lack of understanding and poor communication,” exclaims Swanepoel.
Members often see contributions to the fund as a ‘grudge purchase’ as no one clearly explains and simplifies the benefits, the importance of saving for retirement as well as the other associated benefits, e.g. risk insurance, etc. The recent protracted implementation of only some of the retirement reform proposals clearly illustrates a complete lack of trust and knowledge by members in government and private sectors.
Many fund administrators and consultants do the bare minimum by only ensuring they are compliant with PF 86 and PF 90. This may appease the Trustees or Management Committee members, but the reality more often than not, is that communication content is laced with jargon that leaves members, and often Trustees and Management Committees, uninformed and uninvolved. The consequences of indifferent communication can mean that members are on the defensive and lack confidence in their fund prior to any meaningful engagement, which can be further exacerbated by inaccuracies in the media.
Effective member communication content and techniques will prevent misinterpretations, improve understanding and allow members to make informed decisions or, at the very least, be cognisant enough to seek professional advice.
There is no ‘quick fix’ for addressing and remedying ineffective member communication. It requires a significant time investment and a shift in the mind set of employers, retirement fund administrators and/or their employee benefit consultants. According to Swanepoel, “At the outset of designing an effective communication strategy the initial focus should be on gaining an understanding of the members, of their wants, their concerns and their level of financial literacy. Less of a focus should be placed on retirement wellness and more on financial wellbeing. This will allow for the implementation of communication methods and content which are better suited to the requirements of the members.”
“In doing so, the message is targeted, unambiguous and relatable which, after the requisite frequency and reach, builds the trust of the members and the understanding that retirement funds are a means to providing financial freedom”, concludes Mark Swanepoel.