Your retirement fund probably lags behind world standards when it comes to fairness and equity, Kobus Hanekom, senior manager at Sanlam Employee Benefits Consulting, says.
Hanekom recently attended the International Pension and Employee Benefit Lawyers conference, in Italy. The conference is the centre for international developments around employee benefits.
"While we have a very successful industry, where around 76 percent of South Africans in formal employment are on pension schemes, we are only beginning to deal with anti-discrimination legislation and practices."
The United States, Britain and Australia are more advanced, he says. Also, South Africa is much more prescriptive and paternalistic in its approach. Australia, for example, is way ahead of us on issues such as choice of retirement plans, Hanekom says.
* Worldwide, there has been a shift to defined contribution plans, where you carry the investment risk. In Australia, defined benefit schemes are dead. But in Britain, some unions prefer defined benefit schemes, and, in some instances, pension schemes offer a combination of defined benefit and defined contribution. The advantage being that you get a retirement benefit which is not too subject to market swings, and your employer does not have an open-ended liability.
* South Africa also lags in the provision of pension benefits for atypical workers, such as part-timers, contract workers or sports stars. The demand for equity in social security-type benefits is more developed overseas than in South Africa, where an employer can still get away with excluding atypical workers, Hanekom says.
Structuring retirement plans for part time workers is expensive and ultimately you, the worker, end up paying the costs.
So if you are only working for a short period at a company, there may be more cost effective retirement options for you, such as retirement annuities.
* Phased-in retirement has been introduced in Europe and the United States, in response to a change in employment patterns worldwide. For example, a senior manager, instead of taking early retirement, can take up a less demanding position for a number of years, allowing the company to continue using his or her skills. This would not be an option for South Africans, because of our tax system, Hanekom says.
* The issue of ownership of surpluses that have been built up in defined benefit funds has not been resolved anywhere in the world. The problem is that the rules of funds never made it clear to whom the surplus belongs. The development of labour law and human rights compound the issue.