HR Managers play a vital role in preserving employee retirement funds.

In the dynamic landscape of Human Resources, the role of HR Manager extends beyond the scope of people management and recruitment. From being a confidante to a mentor, and at times even the bearer of disciplinary news, you wear many hats throughout a single day at the office.

But one crucial hat you most likely do not wear all that often is that of financial guide, where you help employees safeguard their retirement funds even if they choose to leave your organisation. And this is where you can make the most notable impact in the lives of both new joiners and leavers.

South Africans face a dire reality with mounting economic pressures driving them to make drastic decisions that directly affects their ability to retire comfortably. The changing retirement landscape means that it is no longer the sole responsibility of an employer to provide for the retirement future of their employees.

Employees are also required (in addition to earning a basic salary) to educate themselves about their financial options and to have a personal stake in their own retirement plan.

Help employees make better financial decisions sooner

This highlights the importance of effective retirement strategies implemented at the beginning of an employee’s career. You play a pivotal role during this phase as you are well-positioned to guide your staff members to think critically about their financial choices and to emphasise the need for preservation of their retirement funds.

A young starter at the cusp of their career might think retirement is not an immediate problem but with a workforce more likely to job hop than ever before, preserving retirement funds should be first choice instead of cashing out to meet immediate monetary needs.

And preservation should not only be viewed as the provision of financial security in later years. It should form the backbone of a holistically composed employee well-being strategy.

If you advocate for retirement fund preservation, you can contribute to the long-term financial health of your employees. Employees with reduced financial stress tend to be happier and more engaged, leading to a more productive workforce.

Compounding growth can boost retirement nest eggs

Growth over time is the number one advantage of holding onto the proceeds of a retirement fund. You can help educate your staff about the effect of compounding interest which means that even a small amount invested can grow significantly over time – as long as there are no cash outs or withdrawals.

This knowledge can be powerful in the hands of employees who will be equipped to make better financial choices especially when they move jobs. Help them to realise that while it is tempting to make withdrawals, the long-term gains translate into less financial stress and a more stable retirement outlook.

As the global workforce ages, more individuals are choosing to work beyond traditional retirement ages. This trend is also due to employees forced to work longer due to bad financial planning early in their career. Planning early for retirement is therefore critical and older staff members should have the appropriate knowledge to effectively manage their retirement funds during this extended phase of employment.

By encouraging retirement preservation, you can help employees ensure that they have adequate financial resources to maintain their desired lifestyle during their extended working years.

A better organisational impact

The benefits of being an advocate of financial independence during retirement gives you a unique platform to promote financial literacy within your organisation. Hosting workshops, webinars or partnering with financial professionals can help you to equip any staff member with the tools they need to understand the significance of retirement fund preservation and take the necessary steps to secure their future.

While helping an individual employee understand their financial standing is outstanding, helping an entire workforce can lead to significant gains – employees who are focused and motivated. Without the added stress of financial uncertainty, staff are less likely to be absent and are more likely to display increased morale and loyalty.

An organisation that genuinely cares about the financial well-being of its employees demonstrates a commitment to holistic development. As custodians of employee well-being, you have the power to shape not just the present but also the future, by empowering employees to secure the retirement of their dreams..

Andre Tuck is a Certified Financial Planner and Team Leader: Retail Investments at 10X Investments.

Want to know more?
10X can help you provide the preservation knowledge you need to empower your employees. Speak to one of our investment consultants on 021 421 1010.

10X Investments is an authorised FSP (number 28250). The content herein is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment or other advice