Is your preferred retirement fund geared for millennials?

By Janice Roberts

Regard Budler, Head of Strategic Initiatives: Momentum Corporate

By: Regard Budler, Head of Strategic Initiatives: Momentum Corporate

Millennials’ representation in the workplace has grown over the past five years from 39% to 52%[1]. They are set to shape the world of work for many years. It is critical that employers, financial advisers and retirement funds understand the psychographics of this generation.

To offer best-of-advice solutions to their clients, financial advisers should partner with a retirement fund that resonates with the Millennial generation who are living their lives in a substantially different way.

Low levels of financial literacy drives high financially vulnerability

For the last two years South African consumers’ finances remained under severe pressure. While Millennials are the most financially vulnerable age group, a lack of financial literacy is a key driver of continued financial vulnerability[2]. Only sixteen percent of Millennials understand the concept of a retirement replacement ratio and less than 44% are aware of investment related terminology such as investment allocation, future contributions and fund credit[3].

Job-hopping impacting retirement outcomes

A widely reported phenomenon is that Millennials change jobs every two to three years – for them job-hopping is the norm.  They are more focused on immediate gratification with less focus on the future and view retirement as a transition phase and not a set end date of their formal working careers1.  This means that they access their retirement savings more than once during their working careers to pay off debt or to pursue their international travel dreams based on the badge value it holds. This behaviour severely compromises the likelihood of them maintaining their standard living during retirement.

Health, wellness and technology

Millennials prefer to pursue their dream careers with employers whose mission matches their values. They place a high premium on their health and wellness and having a healthy work-life balance. They embrace technology in every sphere of their lives and expect highly personalised customer experiences form the brands they interact with1.

Retirement funds need to be geared for Millennials

Financial education is vital for reducing Millennials’ financial vulnerability. Retirement funds should offer financial education and benefit counselling through a multi-channel approach which includes digital platforms, such as access to live webinars, to cater for Millennials.

Millennials experience life digitally, and therefore need to have access to smart digital services across a range of touchpoints, from medical underwriting to when they change employers. It is particularly important that these smart digital platforms facilitate more informed decision-making at the time of resignation as it increases the probability of preservation for these highly-mobile Millennials and ultimately helping them to be financially independent when they retire.

Retirement funds that offer Millennials a programme that rewards their healthy lifestyles provides value and opportunities for meaningful engagement. Millennials with a predisposition towards healthier choices can therefore derive greater value from their membership and appreciate their employee benefits more.

The retirement and insurance benefits offered to Millennials need to be innovative and flexible enough to address the specific needs of this rapidly-evolving workforce while delivering service experiences and engagement that create tangible value in the eyes of the Millennial in the here and now.

Financial advisers should make sure that the retirement fund solution they present to their clients is geared for Millennials, without ignoring the needs of other generations. One size has never fitted all, and it definitely is not going to in future.


[1] Momentum Corporate Workforce research

[2] The Momentum/Unisa Consumer Financial Vulnerability Index

[3] Momentum Corporate’s employee benefits terminology research

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