Turbulent and tough economic conditions mean day-to-day expenses are competing even more aggressively with future savings. However, the right umbrella fund offers value-added benefits and services that help ‘stretch’ employees’ rands and create capacity for them to save more, according to Katherine Barker, Head of Momentum FundsAtWork.
This year the theme for National Savings Month is “Employer-Assisted Saving” and the South African Savings Institute (Sasi) has challenged employers to encourage their employees to save more.
Barker says: “Retirement is not something that is top-of-mind, especially for younger employees. The choices they make during their working lifetime will determine the kind of retirement they will face. However, value-added benefits and services enhance the value employees receive from their retirement fund in the here and now. These benefits facilitate meaningful, more regular engagement and behaviour which generates financial rewards and discounts that can be allocated towards savings.”
Barker believes financial advisers play a key role in creating greater awareness of the value these services and benefits can generate and encouraging active participation. The greater the usage, the more value employees derive. Employees with a greater appreciation of the benefits their employer offers are likely to be more loyal to their employer and potentially more productive in the workplace.
“The right umbrella fund offers a rewards programme which encourages lifestyle choices that lead to improved health and bolster financial wellness. This results in reduced medical expenses which in turn releases more money to cover day-to-day expenses. The attractive discounts that members receive through these programmes also generate significant cost savings,” says Barker.
“However, the real power of a rewards programme is unlocked when the reward structure is cleverly integrated with the umbrella fund’s benefits. For example, members who engage actively with the FundsAtWork’s rewards programme can receive a significant percentage of their applicable insurance premiums back each month, based on their health status. This money can be allocated to their retirement savings or to savings to cover medical expenses.”
A free telehealth service is another popular value-added benefit that helps to prevent unnecessary doctor consultations and the associated costs. Similarly, value-added benefits such as free legal, funeral and trauma support services help employees to save money in these areas.
The Momentum/Unisa Consumer Financial Vulnerability Index (CFVI) shows that a lack of financial literacy is a key driver of financially vulnerability. Value-added services focused on financial education and improving financial literacy help employees to learn good financial habits such as budgeting, which is the foundation for regular saving.
Momentum’s Effective Employee Index confirms a strong link between an employee’s financial wellness, physical health and their ability to perform optimally in the workplace. According to Barker, many of the value-added benefits and services available to FundsAtWork members drive behaviour that improves their physical and financial wellness. As a result, employers offering Momentum FundsAtWork retirement and insurance solutions to their employees benefit from the rise in employee productivity.
Barker says: “The retirement landscape is changing. It’s no longer simply about providing a benefit at retirement. The value-added benefits and services that progressive umbrella funds offer create value in the present and facilitate behaviour that enhances employees’ ability to save.”