A little less than an hour can save your family from a year’s worth of stress
The average time it takes a member to complete three nomination forms is just less than an hour. It can take longer if you have more family members, and a lot quicker if your family is small. Setting aside this time could save your family a year of financial stress if you passed away unexpectedly. That’s because it can take up to a year for your money to be paid to your family if your nomination forms are not submitted or if they are not up to date.
That means one hour of your time in exchange for up to a year of financial distress for your beloved family members!
A typical fund member has three nomination forms to complete
Let’s look at your nomination forms in a different way. Each form unlocks money for your family during difficult times. Depending on what your employer has signed up for, these are the three most common nomination forms a retirement fund member needs to complete:
1 Your retirement savings in the fund and life cover – if your employer has opted for this benefit
2 Life cover from an employer policy – if your employer has opted for this benefit
3 Funeral cover – if your employer has opted for this benefit
Payout of your retirement savings
A nomination of beneficiary form tells the trustees or the insurer whom you would like to receive a share of your retirement savings or, for example, your life cover or funeral benefit. It should be those whom you support financially.
Even though, by law, the trustees make the final decision on how this money must be shared out, if you have an upto-date nomination form, it will guide them and help them conclude their decision faster. This payout includes all the contributions allocated towards your retirement savings. In other words, your total amount of retirement savings.
Payout of your life cover
This can either be as part of your retirement fund or through a separate policy from your employer. In both cases, an updated nomination form is necessary. The total amount that is paid out is usually your yearly fund salary multiplied by a fixed number, for example your yearly fund salary times two. This can be a substantial amount and can help your family with basic day-to-day living expenses when they are grieving. It can carry them through a very difficult time.
Payout of funeral cover
This money will be paid out to cover the costs of your funeral. If you don’t have a nomination form on record, the money will be paid into your estate. Once this money is in the estate, your family will have to wait for your estate to be finalised –which, as mentioned, can take quite some time. The money will also attract estate tax.
Quick tip 1
If you have other policies outside the fund, you will need to complete nomination forms for those as well.
Remember:
Your fund salary (or pensionable salary) is not your net salary or take-home pay. It is the salary on which your contributions are based. This is determined by your employer.
Update payout of your retirement savings forms on AF Online or the AF Mobile app. Otherwise you can get the other forms from your HR department.
Learning from the past – to improve your financial future
The past few years have been difficult for most. Best-selling author Karen Salmansohn once said, ‘The most challenging times bring us the most empowering lessons.’ In this article, we look at five lessons that have empowered ordinary people to make extraordinary changes to their financial future as a result of the challenges they faced during the last few difficult years.
John learned that markets eventually bounce back when it comes to long-term investments. When the strict Covid-19 lockdowns were announced and investments started falling, John panicked and switched his retirement savings into a low-risk portfolio.. He made an emotional decision out of fear. When investments bounced back, he realised that he missed out on the recovery and had locked in his losses.
Karishma learned that debt can drag you down in unexpected markets. She was earning a good salary and comfortably covered her debt. She decided to buy a new car because her job required her to travel frequently. Then the unexpected happened. The markets became unstable with the war in Ukraine and petrol prices soared. Her company petrol allowance no longer covered her full petrol usage and the instability in the markets saw ongoing increases in interest rates and inflation. Her other, smaller debts became overwhelming for her
John’s lesson
I realised that in unstable financial markets, it is better to stick to your longterm plan and spread your investments out (diversify) if you want to get through the instability. Focusing on short-term changes won’t give you a reliable picture of how your investments are doing. And, if you are really worried, rather speak to a financial adviser before making emotional decisions about your life savings.
Karishma’s lesson
Rather pay off your smaller debts first before taking on any new debt like buying a new car. You never know what tomorrow will bring.
‘The most challenging times bring us the most empowering lessons.’
– Karen Salmansohn
Solly learned that in times of financial distress, spending more time with his family and cooking at home saved him money and improved his family relations. He has two teenage boys and an unstable marriage. When Covid hit, Solly had to take a salary cut because he was working fewer hours. To save money Solly encouraged his family to cook meals together, take walks after dinner and watch family movies with home-made popcorn. It gave his family the quality time they needed to restore relationships while saving money at the same time. After a few months Solly realised that they were all getting along much better and he had some spare cash to save for a rainy day.
Tebogo learned that working with a budget keeps finances in check when times are tough. One of her friends helped her draw up a budget for her monthly income and expenses. Instead of guessing how much she had left for the rest of the month, Tebogo paid her bills, then divided what was left over into four and gave herself a quarter of the remaining money every Monday. It helped her to set spending boundaries, which helped her get through the months that followed.
Delia learned that she should always leave a margin of safety when it comes to big purchases such as cars and houses so that her repayments would still be manageable if interest rates increased. Delia bought a house when interest rates were low. Years down the line she bought herself a second-hand car thinking that she could just manage the payments. Soon after she bought her car, interest rates increased gradually over time. She could no longer afford her car payments because she didn’t make sure she had extra money available to pay for the increase in her car payments. She was forced to sell her car for less than it was worth because she couldn’t find a buyer.
Quick tip 2
Solly’s
lesson
When finances are tight, find ways to have fun together as a family at home. Have a bake-off, picnic in the park, play board games – anything that inspires conversation and builds relationships without breaking the bank.
Having a budget helps you to keep a firm grip on your finances. It reminds you what you have to pay every month so nothing slips through the cracks. It is the only way to keep on top of your finances.
Delia’s
lesson
If you buy a car or a house, add some extra money into the monthly repayments. That way, you pay it off faster and, if interest rates go up, you will still be able to afford the repayments at the original repayment amount. Always add a buffer.
Many retirement funds, during the worst stages of the Covid-19 pandemic, temporarily lowered or stopped fund contributions to assist members financially, which would lower the expected retirement outcomes. If you want to reach your retirement goals, now is a good time to increase your contributions or make additional voluntary contributions to make up for those lost contributions.
Benefit statements –how much your retirement savings are worth now
As a member of the Alexander Forbes Retirement Fund, you get benefit statements sent to you at least once a year. If you have policies with other insurers, you will get benefit statements from them too.
These statements provide you with important information that you need to use to plan for your financial future. Unfortunately, each company will present the information in your benefit statement to you in a different way. In this article, we highlight the most important details to look out for and what this information means to you.
Personal details or information
This section is usually up front and tells you what personal information the fund administrator or insurer has recorded for you in their system. Every time you receive a benefit statement you need to check that all your personal details are correct. If there are errors, contact the provider so that you can update this information. If, for example, your cell number is wrong, it could cause delays when you are waiting for a benefit to be paid out.
Investment details
This section on the fund benefit statement will give you your opening and closing balances in the fund. It tells you how much money you’ve saved for retirement at the start of the period it covers and the total amount of money you’ve saved by the end of the reporting period. These figures are important because they tell you how much you’ve saved for the year. You can subtract the opening balance from the closing balance to keep track of your growth from year to year.
The investment portfolios your savings are invested in are also shown in this section.
It’s important to remember that over the last few years, financial markets have been unstable. It is very possible that your retirement savings may not have grown as much as they did in the years before Covid-19 because of this instability.
Expenses or costs
Expenses are made up of administration, reinsurance premiums (for example life, disability and funeral cover premiums), as well as any other fees or deductions. It’s good to keep an eye on these amounts to make sure the expenses or costs are being managed cost effectively. Just remember that life and disability cover through your retirement fund are cheaper than individual policies. It’s a worthwhile expense to protect you and your family.
Investment returns
Your investment value in rands may increase or decrease over the reporting period. Keep an eye on this amount but, at the same time, keep in mind that when saving for retirement you want to invest for long periods for your money to grow – the longer the better. Over short periods like three months and one year the value of your investments will go up and down but over longer periods of five years or more we expect the value of investments to grow. For this reason, it’s better to focus on periods like five or ten years when you look at the returns on your retirement savings. Your investment value tells you if you are on track with your retirement goals. Use My Retirement Picture to see what pension you can expect to get when you retire.
Benefit statements are available online
Good news – you have access to your Alexander Forbes Retirement Fund benefit statements 24/7. All you need to do is register for AF Online. Once registered you can download your benefit statement at any time of the night or day.
This is how you register
Important
The investment return shown is earned on your total savings over the period of the statement.
Important note: This may take a couple of days.
A useful benefit statement should answer these important questions:
How much did I start with?
How much did I contribute?
What growth did I get over the period?
What fees did I pay?
What is my closing balance?
Quick tip 3
If you are struggling to understand your benefit statement, take it to your financial adviser or a My Money Matters consultant. They will be able to explain everything to you so that you know what to look out for in future benefit statements.
Please participate in this quick survey about benefit statements.
your statements.
We measure how well a portfolio is performing by comparing it to a benchmark1. We can see that the portfolio is better than its benchmark over all periods.
Investment returns Performance of investment portfolio to
31 December 2022
Let’s take AF Balanced High Growth as an example
The value of R100 invested over various periods to end December 2022
1 2 3 5 4
Keep in mind that the value of your investments go up and down over short periods like three months
Invest over long periods for your money to grow – the longer the better.
Over a period of 10 years you would have R275 more for every R100 you saved in this investment portfolio instead of its benchmark.
Over long periods, we expect the value of investments to grow. For this reason, it’s better to focus on long periods like five or ten years when you look at retirement savings.
1 What is a benchmark? A ruler shows us objectively how long a piece of string is. In the same way, we use a benchmark as a value to measure how an investment portfolio is performing and if it is delivering on its performance objectives.