What's Happening?

Facebook Twitter Youtube Linkedin

NEED HELP? QUESTIONS@FIA.ORG.ZA

become A FIA member TODAY
member login

Put A Lid On It

ARTICLE BY

  • Carlo Gil - Executive Wealth Adviser
  • Nosipho Nhleko - Lead Specialist for Retail Investment Proposition Management
  • Liberty

SHARE THIS POST

The two-pot system has made it more tempting than ever for clients to raid their life savings in pursuit of immediate relief. But with correct guidance, clients can make choices that will allow them to live like royalty in retirement.

With the cost-of-living getting ever more expensive, it can be tempting for clients to raid life savings for relief. Indeed, the two-pot retirement system has created a sense of opportunity among some retirement fund members. However, it’s no secret that most South Africans currently don’t have sufficient buffers to see them through post-retirement life.

Liberty research shows that many working South Africans only start to think about saving for retirement once they have passed the age of 40 and are therefore missing out on many years of compound growth and tax benefits that will help them build a safety net for their retirement. Only 31% of people between the ages of 30 and 35 have established a proper retirement savings plan, according to a 2022 Liberty research paper.

By following the right approach, most clients can retire comfortably if they are prepared to make changes to their financial habits. While many understand the importance of saving for retirement, building a portfolio may seem complicated, daunting and expensive. This doesn’t have to be the case with the right advice.

Getting the basics right

Building up for a rewarding retirement starts with saving diligently while a client is still working – the sooner, the better.

Liberty Executive Wealth Adviser Carlo Gil points out that while it may feel challenging for many to save more in the present, helping them sacrifice leads to a smoother and more enjoyable retirement. “Preparing and planning for retirement can significantly ease a client’s later years and prevent loved ones from being financially burdened. By saving more than what might seem necessary now, individuals can create a financial cushion that ensures a retirement with more possibilities,” he says.

Strategic savings

Gil believes that at the saving stage, a person needs to consider different investment strategies for maximum growth. Here are some of his favoured options:

Create a diverse investment portfolio: This involves clients investing their savings in a diversified portfolio with a good split between different asset classes that have the potential for growth over time. This can help their capital grow even after retirement.

Purchasing an annuity: At retirement they should consider purchasing an annuity – a financial product that provides regular payments over a specified period, often for the rest of a person’s life. These can provide a steady income stream in retirement. At Liberty a person can invest in a retirement annuity from R500 per month.

Widen the net: Explore other investment options such as unit trusts, endowments and tax-free savings products. These investments can provide additional income and growth potential.

By thinking strategically and prioritising long-term success over short-term gains, clients can eliminate the worry that so many people feel about their financial future and enjoy a prosperous retirement.

When a client gets there

Nosipho Nhleko, Liberty Lead Specialist for Retail Investment Proposition Management, says that, at retirement the client has the option of purchasing a life annuity, a living annuity or some combination of the two, which is termed a hybrid annuity. All of these come with various conditions, depending on the client’s goals and lifestyle.

“With a living annuity, a client has flexibility in terms of the income they can withdraw, the ability to continue growing their portfolio and the fact that they can leave unused funds as part of an inheritance for their beneficiaries. But this comes with risks and it is possible to run out of funds,” she says. “With a life annuity, clients have a guaranteed income for life, which can help them cover their basic necessities. The trade-off is that this product does not allow a client the opportunity to grow their portfolio or leave any unused funds to their beneficiaries when they pass away.”

Many clients desire some of the benefits that come with both living and life annuities. They may want a guaranteed lifetime income plus an inheritance benefit or the ability to supplement their guaranteed income with a market-related bonus. This is where hybrid products come in, as they blend various products and benefits to get the best of both worlds.

Along with getting the calculations right, it’s worth looking at various products on the market which might help your client maintain their retirement lifestyles in different circumstances.

Making it all happen

Retirement is a very personal matter, and every client’s goals are different, but the important thing is to have the right plan in place to achieve those goals. Here, the adviser’s knowledge of the client’s circumstances is key. Combining this knowledge with the tools and products available will make the difference between a good retirement and a great retirement.

Subscriber Terms and Conditions

  1. APPLICATION OF TERMS
    • These terms and conditions (“Subscriber Terms”) apply to the subscription by any qualifying member of the South African Underwriting Managers Association NPC (“SAUMA”) to the services and benefits offered by FIA Services (Pty) Ltd (“FIA Services”) under the SAUMA affiliation arrangement (“Subscription”).

  2. NATURE OF SUBSCRIPTION
    • A Subscription under this arrangement:
      • does not constitute membership of FIA NPC;
      • does not confer any voting rights or governance participation in FIA NPC; and
      • is governed solely by the contractual relationship between the Subscriber and FIA Services.

  1. ELIGIBILITY
    • To qualify for the Subscription, the applicant must, at the time of application, be a current paid-up member of SAUMA.
    • FIA Services will verify the applicant’s SAUMA membership status with SAUMA prior to activation, and may re-verify such status periodically.
    • If a Subscriber ceases to be a paid-up member of SAUMA, the Subscription will correspondingly be terminated.
    • Applicants are required to authorise FIA Services to confirm their SAUMA membership status with SAUMA as part of the application process.

  1. SERVICES
    • The Subscription entitles the Subscriber to the following benefits:
      • Complimentary access to the FIA CPD Platform;
      • Complimentary access to the FIA Insight Magazine (digital edition);
      • Advertising opportunities on FIA platforms at a discounted rate of 15% (fifteen percent) off the prevailing published rates; and
      • Invitations to attend FIA Technical Webinars annually.
    • FIA Services reserves the right to update, vary or substitute the Services from time to time, provided that the overall value and nature of the benefits remain materially the same.

  1. FEES AND PAYMENT
    • The monthly subscription fee is R260.00 (two hundred and sixty rand) for up to seven registered individuals (Key Individuals and Representatives), and R36.00 (thirty-six rand) per additional registered individual thereafter, excluding VAT.
    • The Subscriber shall provide FIA Services with the required details of each individual to be registered under the Subscription for the purposes of activation and billing.
    • All fees are exclusive of VAT, which shall be charged at the prevailing statutory rate.
    • Subscription fees are reviewed annually in March and may be adjusted with effect from 1 April.
    • Any changes to the Subscription, including but not limited to the number of Representatives and Key Individuals registered under the Subscription, may only be effected once annually during the annual review period in March of each year, with such changes taking effect from 1 April.
    • Subscription fees shall be billed monthly in arrears, unless the Subscriber elects an annual billing cycle at the time of application.
    • The Subscriber shall ensure that all billing information (including contact details, authorised signatories and bank account details) is kept accurate and up to date.
    • Non-payment of subscription fees may result in suspension of access to the Services until such fees are brought up to date.
    • The Subscriber acknowledges and agrees that all subscription fees payable under these Subscriber Terms may be collected by way of debit order, which shall be processed by the holding company, FIA NPC (The Financial Intermediary Association of South Africa), on behalf of FIA Services. Payment to FIA NPC shall be deemed to constitute valid and sufficient discharge of the Subscriber’s payment obligations to FIA Services under these Subscriber Terms.

  1. ONBOARDING
    • Onboarding will be conducted as a Subscription with FIA Services under the SAUMA affiliation arrangement.
    • Onboarding will not confer FIA NPC membership status or any associated rights.
    • Onboarding is conditional on confirmation of the Subscriber’s current SAUMA membership at the time of application

  1. DATA PROTECTION
    • FIA Services will process all personal information in accordance with the Protection of Personal Information Act 4 of 2013 (POPIA) as set out in our POPIA policies.
    • By subscribing, the Subscriber authorises FIA Services to confirm their SAUMA membership status with SAUMA and to process personal information for the purposes of fulfilling the Subscription.

  1. TERMINATION
    • The Subscriber may terminate the Subscription by giving FIA Services one calendar month’s written notice.
    • FIA Services may terminate the Subscription on one calendar month’s written notice, or immediately if the Subscriber breaches these Subscriber Terms and fails to remedy such breach within 14 (fourteen) days of receiving written notice.
    • Termination of the SAUMA–FIA Services affiliation agreement shall not automatically terminate these Subscriber Terms.
    • Termination by the Subscriber shall not relieve the Subscriber of liability for any subscription fees accrued up to the effective date of termination.
    • FIA Services may suspend or terminate the Subscription with immediate effect in the event of non-payment of fees by the Subscriber.

  1. GENERAL
    • These Subscriber Terms are governed by the laws of the Republic of South Africa.
    • Any disputes arising under these Subscriber Terms shall be dealt with in accordance with the dispute resolution provisions contained in the FIA NPC membership terms and conditions, as modified to reflect that the contractual relationship is with FIA Services.
    • Any notices required under these Subscriber Terms may be validly delivered by email to the addresses provided in the Subscriber’s application form, and such notices shall be deemed received on the day of transmission if sent during business hours.
    • The Subscriber may not assign, cede or transfer any of its rights or obligations under these Subscriber Terms without the prior written consent of FIA Services.
    • No variation of these Subscriber Terms shall be of any force or effect unless reduced to writing and signed by both FIA Services and the Subscriber.