The retirement fund landscape is shifting amidst a tough economic environment. Speakers at the 2023 Old Mutual SuperFund Summit unpacked the regulatory changes and investment trends that will impact retirement outcomes in the coming years.

In complexity can lie opportunity

The current investment landscape is – as Old Mutual SuperFund Trustee Gary Hartwig described it – “an incredibly tough, complex environment”. And while that’s understandably bad news for household budgets in 2023 – which is another concern altogether – it’s good news for retirement fund members, who are long-term investors”. 

Izak Odendaal, Investment Strategist at Old Mutual Multi-Managers, explained why. “The best time to invest is usually when markets are volatile, uncertainty is high, politics is noisy, the news is very negative and one-sided, and past performance is very disappointing,” he said. “We’re in a tough environment, but – somewhat paradoxically – that makes it a good environment to invest if you're taking a longer-term view.”

Speakers at the SuperFund Summit agreed that despite the current economic uncertainty and market volatility, fund members should not lose sight of the key rules of investment.

“I’m confident that SuperFund has an excellent investment framework and governance structure that prioritises these basics,” Hartwig said. “So with that wide-angle lens, we remain confident that the SuperFund investment offering is delivering what it should”.”

Better member data leads to better member outcomes

In a panel discussion that focused on service and fund member outcomes, Old Mutual SuperFund Trustee Thandeka Zondi highlighted the challenges around gathering accurate data from participating employers and fund members. “It’s not only our fund that struggles with this; it’s an industry challenge,” she said. However, she pointed to the FSCA’s new Conduct Standard as a sign that “change is on the horizon”.

Employers are required to provide accurate data on retirement fund members, in line with the requirements set out by Section 13A of the Pension Funds Act. But while the onus is on employers to gather and provide that information, there’s an understanding that all stakeholders – including fund members, fund administrators, intermediaries, and the funds themselves – need to work together on this.

“As the Fund administrator we are looking for innovative and new ways of helping employers to gather this information so that we can drive the right member outcomes,” said Craig Bestall, Head of Corporate Administration and Servicing at Old Mutual.

Responding to regulatory changes

The 2023 Old Mutual SuperFund Summit took place amidst a raft of new and changing regulations, including the proposed Conduct of Financial Institutions (COFI) Act and the new Two-Pot system for retirement savings.

While those changes will lead to some degree of disruption, incoming Old Mutual SuperFund Chairperson Nhlanhla Nene took it all in his stride. “The retirement fund regulatory landscape is dynamic and ever-changing,” he said. “However, our promise to members is to provide better outcomes at retirement. That promise stays the same. We need to always remember to do the basics in relation to that promise, so we need to pay claims, invest wisely and design benefits that make sense for our employers and members, and make sure that our members are well educated and empowered”.

Two-Pot’s long shadow

The Two-Pot system is a significant change, though. The topic was raised throughout the Summit, and especially during the audience Q&A session at the end. When asked if the system would impact individuals’ investment strategies, Hartwig pointed to modelling that suggested no strategic changes yet. However, he warned: “If we have a mindset of ‘my savings pot is a short-term investment’, we are not going to get to the long-term goal of retirement.”

Hartwig said he anticipates more flexibility emerging over time. “Some members may know that they are planning to withdraw R10 000 in February, for example, when they have access to it, and so they may choose to transition that into an appropriate investment,” he said. “A little flexibility may be the right approach, but from a SuperFund perspective we are certainly not mandating that you must put your Savings Pot into a money market investment or anything like that. We’re keeping our long-term focus.”

Visit Old Mutual SuperFund, our leading umbrella retirement fund, for information on the investment portfolios available to employers.