Image
Icon

Directory

IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconBenefit Administrators & Investment Managers
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconEmployee Benefits Consultants
IconFinancial Planners
IconIndependent Principal Officer
IconIndependent Trustees
IconOmbud
IconPension Fund Trustee Liability Insurance
IconPension Fund Trustee Training
IconPension Funds Adjudicator
IconPublications
IconRegulatory Authorities
IconRetirement Advice
IconRetirement Funds registered by the FSB
IconRetirement Products
IconSocial Grants (Government)
IconTrust Establishment & Management
IconWellness Programs
Image
  Subscribe To »

2016 tax changes show need for closer HR and retirement fund administration alignment

Published

2016

Fri

22

Apr

The likely advent of new tax changes affecting the treatment of retirement funds from March this year, which will change the way that employer-sponsored retirement funds are taxed and will impact on fund members in different ways, highlights the need for human resources personnel and retirement fund administrators to work more closely together.
 
This is according to Costa Economou, CEO of Colourfield Liability Solutions, who is also a member of the Independent Commission for Remuneration of Public Office-Bearers. Economou, who was a keynote speaker at the recent HR Summit & Expo Africa, says, “The main way to improve alignment between HR personnel and retirement fund administrators is through targeted training for those who work in a human resources capacity.
 
The advent of the new retirement fund-related tax regimes as of 1 March 2016, which are part of the ongoing retirement reform process, will require a significantly improved understanding on the part of HR departments, who are the main interface between the employee and the employer when it comes to employee benefits.
 
“A key shift in the retirement industry has been the shift from Defined Benefit (DB) to Defined Contribution (DC) arrangements. Unfortunately, the advent of DC arrangements has removed the financial risk employers historically were exposed to in offering such arrangements to employees. With the removal of this liability, employers now pay less attention to retirement plans. This, coupled with the lack of financial sophistication of members, has led to many retiring on inappropriate benefit levels.”
 
Economou says that for any company, its two key resources are its financial capital and its human capital, namely its employees. He says “The provision of adequate employee benefits, including an employer-sponsored retirement fund, is a key distinguisher in holding onto valuable human capital and allowing a firm to distinguish itself from its competitors.
 
A company’s human resources functionality plays a vital role in protecting and advising on such key employee benefits at different stages of the employee’s working life. Employers need to play a greater role in helping retirement fund members work towards achieving a comfortable retirement, and this is best done through maximising the information that is given to the members, frequently through the human resources department.”
 
Economou says, “Helping retirement fund members work towards achieving a comfortable retirement can be a complex task involving a number of different professionals to a greater or lesser extent. These professionals can include trustees, consultants, investment managers and the employer, which is frequently represented by the human resources division of a company. Members need clear guidance on their retirement fund matters, both when they are still working and when they reach retirement age and transition into retirement.”
 
Economou believes that DC funds have failed their members to a large extent. “HR departments can facilitate a more educated workforce. By focusing the employees’ attention to the correct retirement goals, and using the retirement platform to do this, will go a long way in helping members achieve sustainable retirement benefits.
 
He believes that more can be done to align the functioning of human resources departments with the retirement needs of members. “There should be a strong link between the pension fund universe and what the firm can do for the individual as regards total cost to company. With the provision of employee benefits, individuals obviously understand that their employer cares about them, which is an important part of the value-add proposition for the employee.
 
“However, I believe that human resources departments in general have not been as cognisant of employee benefits issues as they should be. The significant benefit of saving for retirement is not well communicated to employees.”
 
Economou says that there has been a distance between the retirement industry and company’s human resources departments, which, he says, needs to change. “There needs to be more alignment. In this way, the employer can reap the rewards of an improved perception of their employee benefits from the employees themselves, with resultant improvements in staff morale and decreased turnover.”
 
Source: Epic MSLGROUP
 
« Back to previous page Print this page » |
 

Breaking News »

Will you outlive your savings?

Adriaan Pask, Chief Investment Officer at PSG Wealth   Since the middle of the last century, life expectancy has increased rapidly. Studies by the United Nations (UN) and World Health Organisation (WHO) ...
Read More »

  

Bright Africa continues to shine

Africa continues to turn global investors’ heads, despite its challenges. Attracted by its many fast growing economies and burgeoning consumer and business spending – expected to reach US$6. ...
Read More »

  

Tips on stretching your retirement savings

When you finally reach retirement age, you need to be in a position where you can afford to maintain a similar lifestyle which you have been accustomed to prior to retirement. The only way to achieve this is making ...
Read More »

  

Land expropriation - A calming perspective

        Stop the panic over EWC, urges veteran analyst Max du Preez. Sharing an insider’s ear, he highlights practical realities          To ...
Read More »

 

More News »

Image

Healthcare »

Image

Investment »

Image

Life »

Image

Short-term »

Advertise Here
Image
Advertise Here

From The Glossary »

Icon

Deferred Pensioner:

A person who has withdrawn from service or terminated their contributions and elected to receive a deferred pension from their retirement age in terms of the rules of the fund.
More Definitions »

 
 
By using this website you agree to the Terms of Use.
Copyright © Stoker Risk & ICT (Pty) Ltd 2004 - 2018.
All Rights Reserved.
Icon

Advertise

  Icon

eZine

  Icon

Contact IG

Icon

Media Pack

  Icon

RSS Feeds