Your Retirement Savings: Every Contribution Counts

Making the most of your retirement fund membership

Retirement may seem a long way off, but the financial decisions you make today can have a significant impact on your financial security in the future.

For many South Africans a retirement fund is one of the most important and in many instances, the only long-term investment they will have. Regular contributions, investment growth and time all work together to help build a retirement benefit that can provide an income when you eventually stop working.

With the introduction of the Two-Pot Retirement System, retirement funds have received increased attention, particularly around how contributions are allocated and when members can access their savings. Since 1 September 2024, retirement contributions are generally allocated between a Savings Component and a Retirement Component, with the aim of providing limited access to savings when needed while protecting the majority of retirement savings for the future.

But there is another important factor that members should consider: the costs associated with belonging to a retirement fund. Members of the KZN Retirement Fund and KZN Provident Fund have an important advantage. The Funds cover the full cost of administration and risk benefits. This means that there are no administration or risk costs deducted from members' contributions. As a result, the full contribution is directed towards building retirement savings.

In simple terms: Your contribution works for your retirement.

For example, if your monthly retirement contribution is R1,000, the full R1,000 contributes towards your retirement savings, without administration and risk costs being deducted from the contribution.

Over time, even relatively small differences in costs can make a meaningful difference to the amount you accumulate for retirement. The earlier you start saving and the longer your money remains invested, the greater the opportunity for your savings to benefit from investment growth.

PROTECTION WHILE YOU SAVE

Retirement funds are not only about saving for the future. They can also provide valuable protection for members and their families during their working years.

The Funds also provide valuable risk benefits such as death, disability and funeral benefits, giving members additional financial protection when it is needed most. Importantly, the cost of these risk benefits is covered by the Funds, rather than being deducted from members' contributions. This means members can focus on building their retirement savings while still having access to valuable protection.

THE TWO-POT SYSTEM – SAVE FOR TOMORROW, WITH SOME FLEXIBILITY TODAY

The Two-Pot Retirement System was introduced to strike a balance between long-term retirement preservation and the need for limited access to retirement savings during financial difficulty.

Under the system, generally:

• One-third of new retirement contributions is allocated to the Savings Component.
• Two-thirds is allocated to the Retirement Component.
• The Retirement Component is preserved for retirement.
• may access the Savings Component subject to the applicable rules, including the minimum withdrawal amount and tax requirements.

While this provides members with greater flexibility, it is important to remember that retirement savings are intended to provide financial security later in life. Withdrawing from your retirement savings today can mean having less available when you retire. Where possible, consider the Savings Component as a financial safety net rather than an additional source of everyday income.

YOUR RETIREMENT IS AN INVESTMENT IN YOUR FUTURE

One of the most powerful aspects of retirement saving is time. The longer your money remains invested, the more opportunity it has to grow. Contributions made consistently throughout your working life can accumulate into a significant retirement benefit.

This is why it is important to:

SAVE CONSISTENTLY.
PRESERVE YOUR RETIREMENT SAVINGS.
UNDERSTAND YOUR BENEFITS.
MAKE INFORMED DECISIONS.

The Funds administered by Master Builders KZN cover the administration and risk costs so that members can have the added benefit of knowing that their contributions are being directed towards their retirement savings rather than being reduced by these costs.

YOUR CONTRIBUTION. YOUR FUTURE. YOUR RETIREMENT.

Your retirement fund is more than just a deduction on your payslip. It is a long-term investment in your financial future and an important part of protecting yourself and your family. Make every contribution count.

Take the time to understand your retirement benefits and costs, review your fund statement and speak to the Fund Administration team if you have questions about your fund membership or would like to enquire about how this model could benefit you and/or your employees in the long run.

Continue saving today for the financial security you want tomorrow!

Vishane Pramrajh | Retirement Fund Administration Manager