1. Saving for retirement A catastrophe or advantage?
Anne Cabot-Alletzhauser
August 19, 2013

2. Let’s start with an important consideration
Shift focus to life experience of member
Introduce broader accountability
Preservation of assets over time with safety valve
Annuitise savings
Expand the net of coverage
Control Costs
Align the incentives and behaviours
Just where is pension reform actually trying to take us?
It’s not just about what a member retires with...
...it’s about the protections we provide a member with throughout the course of their working life that insure the mental/physical and financial well-being

3. Go to: http://benefitsbarometer. co
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4. Connecting the dots for member well-being
graph

5. The slide that can change the way trustees think
graph
Joe

6. Where is value being destroyed?
By employer
By trustees
Not linking employee compensation/employee well-being through life
Total cost to company
Pensionable pay
Benefit choice
Contribution rates
Retirement dates
Not on-boarding and exiting employees effectively
Preservation
Choice trade-off education
Financial wellness
Not linking employment policy with benefit policy
These issues all have financial implications to employers that they are not appreciating
Not recognising the true liability of members = ability to replace salary income on retirement
Income maximisation is a different investment problem to wealth accumulation
Member choice typically doesn’t address this
Not understanding which decisions add the most value to members’ pockets and which destroy the most value
Performance chasing
Short termism
MIC
Not using valuable meeting time wisely
Use the time to understand your members – knowing what Investec or Allan Gray are buying or selling is perhaps the least important insight you need to have as fiduciaries of your members’ funds

7. Factors impacting replacement ratios for members
Pensionable pay %
Contributions
Salary Progression
Costs of benefits and investments
Investment Returns
Losses due to Non-Preservation
Annuity Factors at Retirement 2 * 1 3 5 4 6

8. How does the employer regard this chart?
An opportunity to attract with better benefits or/
An opportunity to provide employees better take home pay?

9. This fund has experienced high turnover in members
This could be a temporary phenomenon due to business imperatives or something more permanent

10. Most disturbing though is the member attitude towards preservation

11. If these phenomenon persist then the member shortfall in NRR will be highly problematic
NRR drops to 12.3%

12. How could policy changes by the employer or Treasury impact member level?
Joe
The current situation given member experience

13. What if National Treasury imposed preservation?
Joe
This would produce the biggest changes in outcomes of any one decision!

14. What if this employer increased the retirement age to 65?
Joe
Assuming full preservation – each additional year = 7% - 10% increase in NRR

15. Presentation name graph
What on earth is happening here!!!
In 2011 the average member retired with a 32% replacement ratio
The AF Pensions Index projects that: a 61 year old should retire with 59.8%
a 51 year old should retire with 46.1%
a 41 year old should retire with 37.8%

16. Impact of returns and bond yields
Drivers for the 1962-born

17. COST OF INFLATION-LINKED INCOMER R