Retirement funds serve one primary purpose, which is to provide a vehicle to assist members in saving for retirement. Many members reach retirement only to discover that they haven't saved enough to maintain their standards of living. This is why we believe that the road to better retirement outcomes is a two-man journey: with the trustees of the fund who drive benefit design, and with the members who take ownership of decisions such as preservation.
To help ease the retirement decision making during this journey, our OnTrack analysis tool has identified six levers that help analyse the factors that impact good retirement outcomes. These levers, as we call them, allow us to analyse each specific factor individually. Although the OnTrack report is not a member-level report because it analyses the fund design, it’s important that members understand this design to allow them to make informed and wise choices.
So, let's look at preservation.
Why is preserving your pension fund important?
Preserving your benefit every single time you change jobs, for example, allows you to take advantage of your saved contributions and exposing those accumulated savings to compound interest. Therefore, not only do you earn interest on the amount that’s already saved, you continue to earn compound interest on ongoing contributions as well.
When would you need to preserve your retirement savings?
The decision to preserve often shows up at those events that are quite unique and significant:
- Resignation
- Dismissal
- Retrenchment
When making the decision to preserve, consider this Chinese proverb: "The best time to plant a tree was 20 years ago. The next best time is today." Essentially, the good decisions and sacrifices we make today will have a positive impact on how we retire in the future. Stay on course, preserve, so that your money works for you when you stop working.
Now that you’ve learnt about preservation, watch the rest of the videos in this series to learn about: