Simeka, a division of Sanlam, provides retirement advice to various retirement fund boards of trustees to take into account the impact of increased longevity and human behaviour. This aims to empower retirement fund members to make appropriate decisions via the use of an interactive tool.
Sanlam’s network of advisers are also available to provide individualised and professional advice to empower members to deal with the financial challenges that longevity poses through providing appropriate investment and drawdown advice for living annuities and other nest eggs.
Accumulation (of funds before retirement)
An extended investment horizon means that we will need to carry extra risk (exposure to equities) in our retirement portfolios to generate sufficient returns to compensate for a longer lifetime in retirement. Sanlam provides a range of investment structures to enable members to cost-effectively take on risk-adjusted returns within the confines of regulation 28.
Annuitisation (converting a lump sum investment into a series of income payments at retirement)
Sanlam provides a range of guaranteed annuities that remove or reduce the risk of increased longevity for individuals. More recent products have been launched by Glacier by Sanlam where a guaranteed number of units are paid to the individual for life, with the value of these units determined by the underlying portfolio. In this way, individuals can increase exposure to more risky assets such as equities to increase returns (and therefore future increases) while still having the guarantee of a secured income for life.
We have introduced a phased approach to retirement
This approachproposes that the date on which the lump sum retirement benefit accrues to the individual should no longer be dependent on the normal retirement age, but instead should be the date on which the individual chooses to take the amount as a lump sum or annuity. So now individuals can extend their own date of retirement according to their own circumstances and when they prefer to start receiving their pension benefits, enhancing preservation and improving financial security in retirement. Taking this into account, Sanlam has introduced Sanlam Lifestage, which is a trustees-approved default investment strategy which aims to meet each member’s savings requirements working towards either a normal retirement age or a planned retirement age.
Click here to see Viresh’s video discussing Longevity risks further