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Retirement Savings and the Crucial Role of Advisors
by Madeleine Coetzee - Thursday, 30 May 2013, 10:22 AM
 

Recent figures from the 2012 Alexander Forbes Member watch, indicates that on average less than 6% of employees between the ages of 20 and 25 preserve their retirement savings when changing jobs and less than 10% in the age group of 30-40, preserve their retirement benefits.

What this ultimately means is that the later a client starts saving for their retirement, the more they need to put away to make up for lost years.  The pending retirement reforms however, will force investors to preserve their retirement benefits when leaving a pension or provident fund.  These changes will result in employers being compelled to pay retirement benefits into a preservation fund when an employee resigns or is dismissed.  The ability of an employee to choose whether to take a cash lump sum or transfer the funds from a retirement benefit into a preservation fund will ultimately change two to three years from now.  At such time all retirement funds will be required to transfer members’ balances into a preservation fund when members withdraw from the fund prior to retirement.

Some of the changes with regards to accessing funds, allow for only one withdrawal a year which government hopes will encourages consumers to preserve their savings and make withdrawals only when in need.  Highlighting the consequences of not saving early enough in life and the risks involved in a client withdrawing funds from their retirement savings, is crucial for an Advisor to address when dealing with his/her clients.

For more information on this, read the article provided by RiskSA published in the May newsletter of the FPI.

 


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