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Are you an executive on a company pension? You need help!

Even though you have a company pension fund, you remain primarily responsible for the management of these funds.

A friend of mine recently joked that her husband can create a continent-wide restructuring strategy for a client with little effort, but that he struggles to decide which brand of whole-grain bread to buy in the shop.

It’s these executives who often sit across my desk with a strange look of bewilderment on their faces and a pile of unintelligible papers from their company’s pension fund provider.

These executives, now more than ever, find themselves on the front step of their retirement with little or no knowledge of how to plan for retirement.

In the best-case scenario, their retirement savings are sufficient, and they simply need to create the most responsible and tax-efficient plan to be able to make it to 85 and beyond with their funds intact. In the worst-case scenario, they never thought to plan and now find themselves with an insufficient pool of money on which they have to retire.

Many of them were so focused on their business, their career path and their clients that they could not be bothered with their retirement. These executives would often cast a cursory glance at their quarterly retirement savings statements and pay it no further attention.

My co-writer of the double best-selling book The Ultimate Guide to Retirement in South Africa (first and second editions), Bruce Cameron, says that these executives are often caught on the backfoot by a forced early retirement, a sudden unexpected business downsizing (think Covid-19) or simply the rapid passing of time, and they never get the chance to plan properly.

It is important to keep in mind that even though you have a company pension fund and your money is deducted automatically, you remain primarily responsible for the management of these funds. There is definitely no rule against adding to your funds or investing in a separate personal account if you feel that your savings will not be sufficient for a comfortable retirement.

You should also keep in mind that you are entitled to look at your personal retirement funds and at the performance of these funds at any time.

Lastly, it is important to keep in mind that you are allowed, and one could almost say obliged, to get independent professional help while you are still working. A professional, independent and FPI (Financial Planning Institute) certified financial planner (CFP) can help you review your company options, your personal budget and tax obligations and your life-plan to make sure that you save and invest in the most effective way.

At the same time, this planner could review any other policies and savings plans that you have to make sure that they are in the best long-term growth environment to help you save for retirement.

So, please be careful not to completely disregard your pension savings plan while you are still a high-flying executive. If this Covid-19 pandemic has taught us anything, it is that we should always expect the unexpected.

For more information visit www.retirementplanning.co.za

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Wouter Fourie

Ascor® Independent Wealth Managers

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Sound advice – Check the performance returns of YOUR pension fund compared to what other companies are providing. You could be shocked at how badly off your own pension is doing, compared to your friends at some other companies!

This is definitely NOT the realization you want to come to when it is too late.

I’m often surprised at how long people have worked at organizations, and then, when they retire, their pensions are absolutely pitiful! All because there is usually very little aggressive interest in the performance and value being delivered, by the employees, who think “the company” is taking good care of this, when it the boss is all too often just ticking boxes … “Got a pension scheme for the employees? Yup! Is it still the best value out there? Dunno. It was the cheapest quote, and I guess they all pretty much the same!”

Twenty or thirty years later, you are are going to rue having left this MAJOR life decision in the hands of a cheapskate employer!

Years ago, Eskom and Denel were the best-performing pension companies, and head and shoulders above most other private companies – including the large ones.

Not sure who the current front-runners are now, but one thing is for sure (for now) – If you could match your current company pension fund contribution, and instead have put that extra amount into Bitcoin over the last decade, you would have left the performance of your company pension fund in the dust, and been well on the way to retiring on your own very generous terms right now!

Also, don’t forget about these high-flying Australian executives with a burning ambition bringing their outlandish ideas to your pension contribution. Open you eyes – your pension contribution was restructured (together with the company when the Ozzy wizard took over) to let the bottomline look better. These executives get paid on bottomline performances (Google Coleman Andrews) so they don’t think twice to sacrifice your future old age to ensure that their bonuses are humongous. Too bad so sad when you only realise this on the company’s farewell Zoom meeting held in your honour.

End of comments.

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