Improving member outcomes in South African retirement funding

Through the implementation of mobile technology and educational programmes, the Natal Joint Municipal Pension/Provident Funds are helping more South Africans plan for their retirement than ever before

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NJMPF's Financial Literacy Programme focuses on educating members and pensioners in the province of KwaZulu-Natal about financial planning, control and products

Over the past decade, a pivotal shift in the retirement industry has taken place. The move from defined benefit funds to defined contribution (DC) funds means the latter depends heavily on good investment returns. It also means that DC funds, by their very nature, place more risk in the hands of end users.

The need to have better operational systems, added value in the form of reduced costs, improved communication, better financial-literacy education, superior investment practices, modern operational platforms, solid IT solutions, and sound support structures has become absolutely vital.

DC funds must continue to move forward with consistency and be proactive in establishing innovative methods that can improve the retirement outcomes of their members. Advancing better outcomes for stakeholders is achieved through finding new ways of improving efficiency.

Recent projects undertaken by the Natal Joint Municipal Pension/Provident Funds (NJMPF) – provincial municipal retirement funds serving 22,000 active members and 8,800 pensioners across 54 municipal areas – do just that.

Leading provider

The objective of any financial organisation is to increase shareholder value and profit. In the context of a retirement funding arrangement, the objective is similar, as the focus is based on improving benefits for members and developing communities at large. At NJMPF, improving members’ retirement outcomes is related to building a retirement funding service that changes the mindset of members while also achieving cost effectiveness.

Low financial literacy levels are a global challenge, but they’re more prevalent in developing nations like South Africa

We welcome the future through innovation and technology, as these elements help us to strategically position members’ total value proposition. They can also help place good governance and community development at the centre of all decision-making processes.

Over the years, the NJMPF has evolved and developed, keeping with the times by leveraging the latest technologies available in the financial sphere. Due to its continued efforts, as well as its steadfast commitment to providing superior retirement services, the NJMPF is now a leader in the industry – as evidenced by the numerous accolades and recognitions it has achieved over the years. These awards, in turn, support a working governance strategy, growing member knowledge and the assurance that our stakeholders are always at the centre of our decisions.

Our strategy to become a global leader involves having direction, intent and a focused outcome. Through this approach, we have found success in improving stakeholder results. This has given greater value to our members through the provision of a superior retirement service, which essentially comes down to collecting contributions, as well as investing in and paying out benefits to beneficiaries and pensioners.

Financial literacy
For the past year, the NJMPF has collaborated with the National Credit Regulator (NCR) to implement a new module within the NJMPF Financial Literacy Programme. As well as being practical, this new module addresses specific challenges to NJMPF membership, while also encouraging a change in members’ attitudes and behaviour when it comes to financial matters.

The NCR is responsible for regulating South Africa’s credit industry. One of its key tasks is to educate and deal with the needs of historically disadvantaged and low-income individuals. Partnering with this national regulatory body enables us to leverage the expertise of NCR in the field of debt-management education at no extra cost to NJMPF members.

As CEO of NJMPF, I believe that knowledge should be transferred to members through methods that are both cost-effective and innovative. What’s more, this partnership works both ways, as it also addresses the NCR’s mandate to visit areas outside of South Africa’s main urban centres.

Low financial literacy levels are a global challenge, but they’re more prevalent in developing nations like South Africa. To make matters worse, the nation faces surging debt levels, low disposable income and a negative household savings ratio. Teaming up with the NCR was a bold move in our aim to improve financial literacy across South Africa. It is also a continuation of various NJMPF programmes with other South African regulatory bodies that have taken place over the past few years.

For example, we have partnered with both the Financial Sector Conduct Authority (in 2014 and 2015) and the Office of the Pension Fund Adjudicator (in 2016) to promote financial literacy with regard to budgeting and members’ rights. This year, we joined forces with the South African Revenue Service (SARS) to educate our members on tax-free investments and help them understand the role of both tax and SARS in the economy.

Through our Financial Literacy Programme, we aim to develop the capacity of communities and citizens by engaging them through education and training that we believe will help them improve their lives. As such, the NJMPF runs financial literacy campaigns at no cost to the funds.

These campaigns focus on educating members and pensioners in the province of KwaZulu-Natal about financial planning, control and products. Members and pensioners who are educated in financial systems are then able to transfer their knowledge to their immediate families and communities. This leads to citizens making more sound financial decisions, which in turn helps improve standards of living, as well as stimulate the economy at large.

Further, studies have shown that children can play a significant role in financial literacy, both for themselves and their parents. Educational programmes that are engaging for the whole family help to get the message across quicker and more effectively. In a bid to eradicate South Africa’s low financial literacy rate, we have incorporated these findings into NJMPF’s ongoing Financial Literacy Programme.

Epic innovation
In 2017, the NJMPF launched a mobile app that allows members to interact with the DC fund instantly. The NJMPF app sends notifications and news, while also enabling stakeholders to become more financially literate. The app was revamped earlier this year and now includes access to videos, ‘call me’ notices and a log of queries. Today, the NJMPF app motivates members, pensioners and beneficiaries to improve their financial situation by encouraging them to think about retirement planning daily.

But our use of technology doesn’t end there: the NJMPF is also in the process of introducing an electronic barcoding ballot system, which will assign all members a unique barcode that has been designed specifically for them.

Our electronic voting system, meanwhile, has been enhanced to include voting on the NJMPF website and mobile app. Members will be able to log into the web portal and click the voting tab to cast their ballot for their preferred trustee. The data will then be filtered back to NJMPF, using the unique barcode to assist in automating the scanning and counting process, while verifying each ballot and preventing vote duplication.

The system will also generate reports and flag any potential inconsistencies. Our new online contribution submission system, known as Epic, automates this area of our operations, improving accuracy and efficiency in the process. The Epic system will serve in a client portal capacity, allowing the employer to submit contributions and member information online.

The NJMPF is committed to the continual training of our trustees, exposing them to the latest industry thinking and keeping them informed of upcoming legislation. Combined, the excellence of the administrative functions performed in house by highly skilled specialists and the use of the latest technologies have helped elevate NJMPF to a world-class retirement fund.