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Developing Responsible Financial Solutions

Key Performance Indicators

Funds use the retirement benefits counselling service
 

52

Policyholders able to use Sanlam Reality Access via Sanlam Group Risk

Over 900 000

Through Sanlam Corporate, employers can access financial solutions that enable the financial resilience and prosperity of their employees. These solutions include financial advice, investments, insurance and annuities. We focus on delivering an inclusive ecosystem of services that aligns with both the operational and aspirational requirements of our broad spectrum of clients.

Free Retirement Benefits Counselling

Preparing for retirement requires careful planning, a commitment to the process and the conviction that the support an individual receives along the way will assist them in reaching their desired financial outcomes.

The lack of preservation is the single biggest impediment to better financial outcomes at retirement according to the Sanlam Benchmark research. Sanlam Corporate wants more retirement fund members to preserve their benefits to improve their financial resilience. To this end, our pioneering individual member support service is provided free of charge to qualifying retirement funds.

The Sanlam Benchmark research has shown that approximately 40% of members are not aware of the tax impact of withdrawal or the detrimental effect that doing so has on their future retirement outcomes. Accordingly, Sanlam has provided retirement fund members free access to a range of digital tools, as well as to human retirement benefits counsellors to ensure they have the necessary information to enable better decision-making especially at withdrawal and to transact in order to remain preserved.

Sanlam Corporate invested significantly to ensure that our counselling capability engages members to provide relevant information so that they are aware of their withdrawal and retirement benefits, range of options and the financial impacts thereof. Fund members can engage with the service through a spectrum of communication channels from WhatsApp to member apps to human counsellors, representing a robust ecosystem to address the risks of poor decision-making. This ecosystem is enabled by data and analytics that support employers in ensuring that the right interventions are applied for employees at the right time. Many fund members do not have access to financial advice, hence, retirement benefits counselling fills the information gap to address the needs of the underserved to improve their financial resilience.

Exiting employees that receive retirement benefits counselling were found to be three times more likely to preserve their retirement funds than those who did not. This is a substantial difference in an environment where rates of preservation have been historically poor and the long-term impact of withdrawal highly negative.

By the end of 2019, 52 funds had taken up the basic free counselling service providing access to approximately 400 000 members.

Free Information to Support Responsible Financial Decisions

It is vital that retirement fund members understand the importance of accumulating enough money for retirement. At Sanlam Corporate we help responsible employers and intermediaries to secure a resilient financial future for all fund members.

Sanlam Corporate made the 2018 Manual on SA Retirement Funds available free of charge to all Sanlam stakeholders registered on any of the SEB online portals. The manual provides a comprehensive summary and explanation of the provisions of the Pension Funds Act, Income Tax Act and other significant acts, directives, codes and requirements that apply to retirement funds.

Written by a panel of recognised authors in the field of retirement benefits, the manual deals with the occupational social security arrangements in South Africa, the law on the administration of retirement funds and other employee benefits and their taxation.

The Sanlam Financial Resilience Index (SFRI)

The Sanlam Benchmark research is South Africa’s most comprehensive and respected retirement industry study. The study has been conducted since 1981 and this year 100 funds, 100 employers and 100 employee benefits consultants were surveyed via a combination of face-to-face interviews and online studies.

In the 2017 Sanlam Benchmark, we introduced the SFRI. The intention of this index was to offer a diagnostic tool that could be used to determine what obstacles exist that prevent retirement fund members from improving financial resilience. Since 2017, we have engaged with numerous fund members and have received over 5 000 responses.

This year SFRI conducted research among Sanlam employees. The results confirmed that regardless of the sector and the functional roles individuals have, people find it difficult to cope financially. Through this process we identified several strategic deliverables, which Sanlam is exploring to make a difference and empower employees along their financial journeys.

The SFRI assigns a score that can be used as a benchmark to measure the financial resilience of any given fund against the industry in general, across the following six categories:

  1. Income and package composition
  2. Financial wellness
  3. Level of indebtedness
  4. Budgeting
  5. Provision for retirement
  6. Advice and financial planning

The focus of the research is on understanding what members’ specific needs are for any given employer. We believe that engagement is vital to improving members’ retirement outcomes. This includes the frequency, timing, method and simplification of complex topics.

Financial Inclusion Enabled by Sanlam's Umbrella Funds

Sanlam offers a suite of umbrella fund solutions that meet the full spectrum of needs across the range of South African employers, including two funds designed to enable financial inclusion for financially vulnerable clients.

  • the Sanlam Unity Fund for employees in the agricultural sector; and
  • the Small Business Provident Fund for employees in the small business market.

These options provide simplified and low-cost access to formalised retirement funding and group insurance for employees within these sectors.

Financial inclusion is ensured through benefits that would not typically form part of the services due to challenges such as high retail cost structures for low-income earners and barriers to information. We address these challenges through appropriate group-based product design, simplified advice frameworks and sustained technological innovation to deliver access and inclusion at low cost to a broad spectrum of clients.

Simplicity and Affordability Enabled by a Low-Cost Annuity Option

When approaching retirement, low-income earners typically have lower funds accumulated and therefore require a simplified product structure and options. The traditional suite of retail annuity options available in the market do not offer sufficient simplicity and affordability. We developed a low-cost annuity option with a simplified product structure and limited flexibility to avoid the costs associated with more sophisticated structures aimed at higher-income earners. The annuity can be deployed as both an in-fund or out-of-fund solution.

The reduction in costs allows for a meaningful increase in the income available to retirees as well as the sustainability thereof. This results in enhanced financial inclusion as lower-income earners can sustainably optimise their incomes in retirement.

Financial Inclusion Enabled by Low-Cost Advice

Most retirement fund members do not have access to their own financial advisers. High-quality financial advice has proven to deliver material positive impacts on financial outcomes. To address this challenge, we developed the capability to provide low-cost financial advice to all members of retirement funds through the mechanism of salaried financial advisers who are remunerated by the retirement funds or employers at no additional cost to the members. These salaried financial advisers provide high-quality telephonic financial advice with a specific focus on withdrawal benefits across the breadth of the membership base of such retirement funds, irrespective of the income level or wealth status of the member being advised. This ensures that retirement fund members make responsible and resilient financial decisions.

Reality Access Available to All Group Risk Policyholders

All Sanlam Group risk policyholders qualify to participate in the Reality Access loyalty programme free of charge. The programme is managed by Sanlam Reality and rewards members for being financially responsible. Members are provided with information and tools to help them to make the most of their money.

The Reality Access suite features a range of services to all insured members irrespective of their income level. The intention is to enable financial resilience for insured members and to build more meaningful and regular relationships with them. The range of services includes:

  • Burial repatriation and support
  • Legal assistance
  • Emergency medical support
  • Trauma counselling, and assault and HIV assistance
  • Discount coupons
  • Wealth sense

Workplace Consumer Financial Education

Financial education is the cornerstone of enabling financial resilience and prosperity and interventions at the workplace have been shown to have a significant positive impact on the lives of the recipients. We offer free consumer financial education to designated financially vulnerable groups at workplaces through our partnership with the ASISA Foundation.

These educational initiatives aim to provide meaningful information in an accessible and inclusive manner. They help change behaviour while building knowledge and skills to assist individuals, families and communities to better manage their financial affairs.

Sanlam Cyber Resilience Benchmark

The 2019 Sanlam Benchmark research highlighted severe gaps in awareness, understanding and capability among employee benefits consultants and trustees to identify and mitigate cyber-risk. Approximately 1 000 guests drawn from across the retirement funding industry were informed of the threat of cyber-risk to retirement funds at the Sanlam Benchmark events held nationally. Sanlam Corporate consequently released the Sanlam Cyber Resilience Benchmark to empower stakeholders to practically evaluate the cyber resilience of their service providers in order to make informed decisions and to contribute to the systemic resilience of the retirement funding system in South Africa. Read more about the Sanlam Cyber Resilience Benchmark.

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