Many farm workers are not prepared for the day that they have to retire. Even those that have started investing in retirement funds often don’t realise how much they are not getting out of their investment due to the funds being eroded by unnecessary administrative and management fees.
Farmers who want to assist their employees in preparing for this crucial stage of their life don’t have that many options to look at, when searching for reliable, personalised and dynamic health and retirement cover.
“The retirement portion of employee benefits play a pivotal role in the agri space,” says Bianca Viljoen, director of marketing, rewards and distribution at Agility Agri. “A lot of farmers want to assist their employees in having access to a retirement solution.”
The one thing that stands out especially in the agri space, Viljoen says, is the fact that employers want to look after their employees, but they don’t always understand exactly how this works and what it entails. She advises farmers to do some research to see what options are out there; speak to a financial advisor, get more than one opinion and compare those asset management fees and the administration fees. At the end of the day that plays a pivotal part in getting the maximum outcome on investments.
Whether the employee actually goes on to retirement or passes away, there needs to be funds available for their families. Retirement funding can be acquired as a separate service, or it can be combined with affordable group risk benefits to cover death and critical illness.
What are the key aspects of retirement solutions?
“There are a number of key aspects that employers are looking for in retirement solutions for their workers,” says Viljoen. “You also have to keep in mind that each and every one of these factors have a direct impact on the end result of the investments and also the money that goes into savings.”
In an investment environment you want as much as possible to go into the investment portfolio itself, and not have it be eroded by unnecessary costs and fees.
Agility Agri built a product model specifically for the South African agri sector that ensures that there are reduced administration fees.
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“These reduced administration fees have a significant impact on the money that enters and remains in the investment,” says Viljoen. “Employers have to be mindful to find retirement cover options that provide the lowest administration fees that eat away at the money that is being put aside for retirement.”
Another aspect to take into account is the asset management fees.
“We at Agility have partnered with Sygnia as an investment firm and the entire range of portfolios cater for very low asset administration.”
This has the added bonus of having reduced group risk premiums when combining the retirement solution along with a group risk solution into a bigger integrated solution. The options around tailoring a solution specifically for an employer is a lot broader then.
Solutions for the different stages of your life
“The important part of our offering to the market is that it’s based on life stages,” says Viljoen. “We call these solutions life stage portfolios.”
These life stage portfolios are done based on the typical risk profile that would be relevant to a person’s life at their current stage. As an example, if you are a young employee with a small family, with a long way to go before retirement, you can afford to invest in slightly higher risk portfolios that give you a little bit of a better return.
“Your appetite for risk needs to be higher, but then obviously you get the benefit of an increased return.”
There is also the moderate fund that caters for the average worker between the ages of 28 and 45. The balanced portfolio gives an equal balance of high-risk high-return and lower risk investments with slightly lower returns. Then as you move closer towards retirement you want to reduce your risk as much as possible, so there is a more stable investment option for that stage of your life.
“Agility has a combination of active fund management and passive fund management so that gives you a balanced benefit to all investment strategies,” says Viljoen.
“Especially with Covid now we can see by their returns that investments are significantly impacted worldwide. So, in situations like these a combination of passive and active investment strategies do come out very positive at the end of the day.”
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Measuring the performance of your investments
During these volatile times, and in the thick of the Covid-19 pandemic people are struggling, and it is important for investors to be able to measure the performance of their investments when they decide to take a specific solution.
“You have to critically assess how the funds that you’ve been investing are performing under various circumstances,” says Viljoen. “So, it’s vital to speak to a financial advisor or an investment specialist for expert advice.”
According to Viljoen, employers often take solutions for their employees and then leave it be, since it’s covered. But it is important to assess the solutions that you chose on an ongoing basis and see if it is still the best solution. Especially with the dynamic environment that we’re sitting in right now, where a lot of changing factors are immediately affecting investment performance.
“Nobody knows exactly what the market is going to be doing, so really taking a critical look and assessing what other options you have will help you to always optimise your investment in your future.”
A financial adviser can look at your investment portfolio to help you, but it needs to be someone who’s had significant experience especially within the agri sector. Or you can make contact with Agility Agri directly to ensure that you are provided with a solution that’s completely unique and that integrates a broader range of employee benefits into a single solution.
If you want to find out more about Agility’s Health Squared options, feel free to reach out to Marcia Le Roux via email marcialr@agilitydistribution.co.za or by calling 011 796 6425.
READY TO TAKE THE FIRST STEP? Click here and Agility will contact you.
Now on Food For Mzansi TV: Agility on farmworker retirement plans
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