Eight things to consider when joining your new employer’s retirement fund
The start of the new year marks the start of new employment opportunities for many people, with many new and exciting challenges. But one of these challenges shouldn’t be joining your new employer’s retirement fund.
1. Does your new employer offer a retirement fund?
Retirement funds are set up to help you save for your retirement. When you reach your retirement age and can’t continue working for your employer, the money that you have saved in the fund will help provide you with an income.
2. Have you received your member booklet for the fund?
Every member of a retirement fund is entitled to information about the fund. The retirement fund will provide you with a member booklet that sets out how the fund works and the benefits that you are entitled to. The booklet will explain the benefits you get when you retire or change jobs and what your family will get if you die. It should also contain information about your insurance benefits and the costs, the fund’s investments, and the costs of the investment portfolios.
3. How much do you and / or your new employer contribute to the fund?
By the time that you retire, you should have saved enough to receive an income that can replace what you have been earning to cover your ongoing living expenses. Planning for retirement isn’t only for those approaching retirement age. Preparing now – regardless of your age – can make the difference between enjoying your retirement or struggling to get by.
You can check to see if the contribution being made to your new retirement fund is enough to ensure that you will have enough income in retirement. An online calculator or financial planner can help you see what income you can expect in retirement and whether you will need to make other arrangements to save more for retirement.
4. What is the retirement age at your new employer?
The sooner you start saving for your retirement, the less you will need to save each month to reach your savings goal as you will be saving for a longer period. Also, the longer you have until you reach retirement age, the more you will be able to save and not have to use your retirement savings to generate an income.
5. Where is your retirement benefit invested?
Your contributions to your retirement fund will typically be invested in the market to give you the best possible long-term growth. Generally-speaking, the best way of earning good growth on savings over a long period of time is to invest most of your money in shares and property. Although the value of shares and property goes up and down a lot every month, when you are ready to retire one day, these investments should have grown your savings the most.
There are many factors across the world that affect the growth and value of investments in the market, especially over the short-term. However, it is critical that you keep a long-term view when thinking of your retirement savings goal.
It’s a good idea to understand your retirement fund’s investment strategy and know where your retirement benefit is being invested.
6. Does your retirement fund or employer offer group insurance benefits?
Many retirement funds and employers take out group insurance cover for members and employees. Have a look at your retirement fund’s member booklet or find out from your HR department if you have group insurance and how it’s been structured.
It's important to know the amount of cover you are entitled to. Will this be enough to settle your debts and provide your dependants with enough income if you die or if you become disabled? You may need more insurance cover in your own name if the cover through your new retirement fund or employer doesn’t meet all your needs.
7. Have you completed the Dependants and Nominees form?
The law says the trustees of the retirement fund must decide how to divide a member’s death benefit between the late member’s dependants and nominees if a fund member dies. Even if your group life cover is not through your retirement fund, your retirement savings in the fund will need to be paid out.
The trustees need to find out who the member’s dependants are and then decide how to pay the benefit fairly. The time taken to pay the death benefit can be shortened if there is a recent, up to date Dependants and Nominees form. You should list your legal dependants and people who are financially dependent on you on the form.
If your group life insurance is through your employer, it’s just as important to complete the Dependants and Nominees form to ensure that benefit is paid in line with your wishes.
8. Have you arranged online access?
Most retirement funds provide members with real-time online access to your fund credit value. The member booklet or your human resource (HR) department will be able to assist you with information on how to register for the online access. Many online portals also have information about your retirement fund stored for members to access easily.
1. Does your new employer offer a retirement fund?
Retirement funds are set up to help you save for your retirement. When you reach your retirement age and can’t continue working for your employer, the money that you have saved in the fund will help provide you with an income.
2. Have you received your member booklet for the fund?
Every member of a retirement fund is entitled to information about the fund. The retirement fund will provide you with a member booklet that sets out how the fund works and the benefits that you are entitled to. The booklet will explain the benefits you get when you retire or change jobs and what your family will get if you die. It should also contain information about your insurance benefits and the costs, the fund’s investments, and the costs of the investment portfolios.
3. How much do you and / or your new employer contribute to the fund?
By the time that you retire, you should have saved enough to receive an income that can replace what you have been earning to cover your ongoing living expenses. Planning for retirement isn’t only for those approaching retirement age. Preparing now – regardless of your age – can make the difference between enjoying your retirement or struggling to get by.
You can check to see if the contribution being made to your new retirement fund is enough to ensure that you will have enough income in retirement. An online calculator or financial planner can help you see what income you can expect in retirement and whether you will need to make other arrangements to save more for retirement.
4. What is the retirement age at your new employer?
The sooner you start saving for your retirement, the less you will need to save each month to reach your savings goal as you will be saving for a longer period. Also, the longer you have until you reach retirement age, the more you will be able to save and not have to use your retirement savings to generate an income.
5. Where is your retirement benefit invested?
Your contributions to your retirement fund will typically be invested in the market to give you the best possible long-term growth. Generally-speaking, the best way of earning good growth on savings over a long period of time is to invest most of your money in shares and property. Although the value of shares and property goes up and down a lot every month, when you are ready to retire one day, these investments should have grown your savings the most.
There are many factors across the world that affect the growth and value of investments in the market, especially over the short-term. However, it is critical that you keep a long-term view when thinking of your retirement savings goal.
It’s a good idea to understand your retirement fund’s investment strategy and know where your retirement benefit is being invested.
6. Does your retirement fund or employer offer group insurance benefits?
Many retirement funds and employers take out group insurance cover for members and employees. Have a look at your retirement fund’s member booklet or find out from your HR department if you have group insurance and how it’s been structured.
It's important to know the amount of cover you are entitled to. Will this be enough to settle your debts and provide your dependants with enough income if you die or if you become disabled? You may need more insurance cover in your own name if the cover through your new retirement fund or employer doesn’t meet all your needs.
7. Have you completed the Dependants and Nominees form?
The law says the trustees of the retirement fund must decide how to divide a member’s death benefit between the late member’s dependants and nominees if a fund member dies. Even if your group life cover is not through your retirement fund, your retirement savings in the fund will need to be paid out.
The trustees need to find out who the member’s dependants are and then decide how to pay the benefit fairly. The time taken to pay the death benefit can be shortened if there is a recent, up to date Dependants and Nominees form. You should list your legal dependants and people who are financially dependent on you on the form.
If your group life insurance is through your employer, it’s just as important to complete the Dependants and Nominees form to ensure that benefit is paid in line with your wishes.
8. Have you arranged online access?
Most retirement funds provide members with real-time online access to your fund credit value. The member booklet or your human resource (HR) department will be able to assist you with information on how to register for the online access. Many online portals also have information about your retirement fund stored for members to access easily.
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