FROM THE EDITOR

UNLIKE in some countries, South Africa has always had a very strong employee benefits culture: the employer you work for does not just pay you a salary; it provides and contributes to a number of other benefits, probably the most important of which is your retirement savings.

This harks back to the era when employees often remained with a company for their entire working life, starting off perhaps at a junior level and working their way up through the company. On retirement day the employee would be the subject of a grand send-off party, be presented with a gold watch for the many years dedicated to the company, and walk into the sunset to retire comfortably, having built up a sufficient nest egg over all those years.

There were also generous tax breaks for employers who contributed to their employees’ retirement savings. In this way, the government could limit the number of people having to rely on social grants in their old age.

The world of employment has changed quite radically: the workforce is far more mobile, and younger people are more likely to chop and change jobs and employers.

Sadly, many people cash in their retirement savings when they change jobs, and this has led to a retirement funding crisis that the government is attempting to rectify through legislation and tax concessions.

What is also needed is greater emphasis on financial education, and this is where publications like IOL MONEY can play a role. If people had a better understanding of the full benefits of preserving their retirement savings, perhaps they would forsake any short-term gains for the security and freedom that comes with building wealth over the long term.

Martin Hesse