Retirement fund membership is one of the best ways to ensure that you are adequately provided for when you retire. However, you have to be actively involved throughout your membership to have the best outcomes. Here are a few tips on how to do so:
- Choose a retirement fund that suits your needs
Most employers will have one retirement fund – therefore, there would not be an option to choose which fund to belong to. However, other employers have more than one retirement fund for their employees to choose from. In this instance, make sure that you compare the contribution rates and benefit arrangements of all the retirement fund choices you have and make a decision based on what best suits your unique situation. You might even want to take financial advice at that point.
- Make sure your information is correct
When joining a retirement fund you will be required to complete a membership form and a beneficiary nomination form. Make sure that the information you provide is correct. Whilst a beneficiary nomination form is not binding on the fund, it will assist the fund in locating your beneficiaries in the event of your passing.It is not only good practice to complete one when you join the fund, but also to update it, whenever there are changes eg, marriage, divorce, subsequent births etc. Also ensure that such a beneficiary form is signed, dated and submitted to both the employer and the fund.
- Track your benefit statements
As a member of a retirement fund you are entitled to a benefit statement annually. It is the responsibility of the retirement fund to provide you with a benefit statement. If you do not receive a benefit statement each year, you must demand one from the fund. If the fund still fails to provide you with a benefit statement upon request, you may lodge a complaint with the Office of the Pension Funds Adjudicator.
A benefit statement is important because it provides you with a snapshot of your benefits, which will include:
- Your personal details;
- The date you joined the retirement fund;
- Your fund credit i.e. how much you have contributed to the fund as at the date of the benefit statement plus growth,
- The benefits you are entitled to in case of resignation, retrenchment, dismissal, retirement, disability, death etc;
- Whether contributions are up to date.
- Know your other benefits or entitlements
Some retirement funds allow members to take a loan for purposes of building or improving a home. It is always important to familiarise yourself with the terms and conditions of such loans before you enter into one.
In addition, some retirement funds allow members to choose where their funds may be invested. Find out if your fund provides for this and before you exercise this choice, get financial advice. For those who do not feel comfortable to make their own investment choice, the board of management of the fund will always have default portfolios, in terms of the investment policy/strategy.
Lastly, it is important that as a retirement fund member, you know your rights, benefits and most importantly understand how your fund works. Should you feel aggrieved with your retirement fund for any reason, lodge a complaint with them first and if you remain dissatisfied, you are welcome to lodge a complaint with our office at the following address: enquiries@pfa.org.za.
Should you wish to learn more about the Office of the Pension Funds Adjudicator and its overall mandate, visit our website on www.pfa.org.za.
Enjoy your participatory retirement fund membership.
