Financial literacy key to social security

Sam Camilleri, chief executive and principal officer at the Natal Joint Municipal Pension/Provident Funds

Sam Camilleri, chief executive and principal officer at the Natal Joint Municipal Pension/Provident Funds

Benjamin Franklin said that: “If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest.” This highlights the real value of knowledge, according to Sam Camilleri, chief executive and principal officer at the Natal Joint Municipal Pension/Provident Funds (NJMPF).

“The NJMPF believes knowledge should be transferred to members through cost-effective and innovative methods,” says Camilleri.

“NJMPF aims to advance financial literacy education that is practical, and addresses the specific challenges of the NJMPF membership while aiming to change the mindset and behaviour of members on money matters.”

Camilleri says the work being done at the fund illustrates the passion the board, management and staff have for advancing members’ level of financial literacy, striving for better management of their finances with the hope that those efficiencies will gradually result in more savings, proper management of debt, better allocation of investment assets and sufficient risk cover.

The NJMPF launched its updated interactive webpage during 2016, the object of which, according to Camilleri, is to improve communications, educate, provide information, update stakeholders on recent industry and fund activities and legislation and to enhance members’ financial literacy levels.

“Studies and research by the NJMPF, using its membership data, show that online mediums of communication will be vital for new members (millennials) as they progress into the working world and become members of NJMPF.

Camilleri says in 2017 the NJMPF introduced a mobile application with the slogan “the fund in the palm of your hand”, which helps bridge the gap between members and the fund.

“The app will provide clear and consistent information, reduce the potential of uncertainty, promote timely and accurate communication and education, while developing a tool which addresses participants’ challenges, needs and aspirations.

“Through the mobile app, the NJMPF introduced and achieved a new method of communication and education using modern information technology. The new method of communication is critical for the NJMPF because of the demographic and geographic variances of our membership.

“The move from traditional methods and means of communicating to more modern systems of communicating shows the strategic view of forecasting and sustaining the future developments as the world is digitised.”

Camilleri says the mobile app demonstrates innovation as:

a) NJMPF is now able to reach its membership much faster, with ease and at a fraction of the cost of traditional methods of communicating. It also delivers effective education directly to members in real time. This means the gap between the NJMPF and members in information sharing is eliminated. 

b) It allows the NJMPF to reach members in remote areas and eliminates third-party links while improving the provision of knowledge. 

c) It allows for communication to be enhanced and builds capacity for members to be financially independent and to have relevant knowledge about the fund instantly.

“In providing our financial literacy programme we have been partnering with the South African National Credit Regulator (NCR), which has been a continuation of the NJMPF’s programme of the past few years with South African regulatory bodies, that started with the Financial Services Board presenting at roadshows to our members and to Municipal HR staff in workshops.

“This was followed by representatives from the Office of the Pension Fund Adjudicator explaining their role and what the rights of a member are.

Camilleri reports that the NJMPF is the only South African retirement fund working with the NCR on a financial literacy project.

The NCR is responsible for the regulation of the South African credit industry. One of NCR’s tasks is to educate and deal with the needs of historically disadvantaged and low-income persons.

“Partnering with the NCR allows for leveraging the expertise of NCR on debt management education for NJMPF members while addressing the NCR’s mandate of visiting areas outside of the city,” says Camilleri.

“The message which has been communicated by the NJMPF and NCR is: know your credit score, reduce your debt levels, know your rights regarding credit/debt, start saving and resist temptations.”

Camilleri says low financial literacy levels are a global challenge and more prevalent in developing nations like South Africa. Coupled with this, are the surging debt levels and low disposable income of South Africans.

“The financial literacy initiative is innovative because, although national treasury believes it is essential, retirement funds in South Africa don’t have a legislative mandate to provide financial literacy programmes.”