Lesotho Prime Minister Tom Thabane.
The year 2017 has been an important one in the history of the Transport Sector Retirement Fund, with both a name change and an expansion in the scope of the fund’s activities. The fund has become an industry umbrella fund after the cancellation of the Collective Bargaining Agreement in 2014.
The fund was established in 1992 to provide the members of the road freight and logistics industry with adequate retirement and risk benefits, and to pay out any withdrawal claims when they arose.
Today, the Transport Sector Retirement Fund is a defined contribution provident fund established in terms of the Pension Funds Act, with 2 916 participating employers and about 72 000 active members.
The fund’s recent name change from the Road Freight and Logistics Industry Provident Fund to the Transport Sector Retirement Fund came about because the fund expanded its sphere of operations to encompass the broader transport sector, according to Joe Letswalo, the fund’s principal officer.
“The fund originally only covered the road freight and logistics sector, which is limited to transporters carrying other people’s goods for gain. However, there is a lot of movement in the industry among our members, most of whom are truck drivers and can work in any one of the many sectors in the transport industry.
“This movement negatively affected members’ retirement savings when they changed jobs and moved to a transport company outside our jurisdiction, as they had to withdraw their retirement savings.
“However, we know that one reason why South Africans have inadequate savings at retirement is that they do not preserve their retirement savings when changing jobs, putting their retirement years at risk.”
Letswalo says the change in name of the fund signifies the expansion of its scope that was overdue in terms of ensuring continuity of members’ retirement savings and investments, and has been welcomed by the authorities, members and key role players within South Africa’s transport sector.
He explains that in a fluid and rapidly changing transport environment the Transport Sector Retirement Fund aims to be the constant factor within members’ working lives, upon which they can absolutely depend.
“We aim to provide stability to our members’ retirement savings,” says the fund’s principal officer. The essence of the fund’s business is to prepare its members for retirement by supporting their saving efforts, to ensure they can retire with the same kind of lifestyle they were accustomed to during their working life.
“Our main purpose is to grow our members’ assets through the fund’s investment processes and ensure their returns are as profitable as possible,” says Letswalo.
“We differentiate ourselves from many other funds by our single-minded drive to profit our members. All the proceeds of investments are reinvested into members’ retirement savings.
“For example, through our self-insurance we had surpluses of around R600-million, which if we had obtained insurance from a private insurance company would have gone into the profits of that organisation, but we were able to reinvest it into members’ savings and increase their benefits.
“This makes the Transport Sector Retirement Fund fund highly competitive, both from cost and benefits perspectives. Our shareholders are our members. We are non-aligned and a stand-alone, which is helpful in our efforts to maximise our members’ returns,” says Letswalo.
According to the World Bank, only 6% of South Africans save enough for retirement. The low level of savings in the country is the biggest reason that, relatively speaking, few South Africans are able to live independently post-retirement, which becomes a huge burden for government’s social security services. In last year’s National Budget, social assistance was projected to increase from R129-billion to R165-billion by 2018/19.
Letswalo’s views are supported by the Old Mutual Key Savings & Investment Trends 2017 report, which states that while this year has seen an increase in the penetration of private retirement annuities, 40% of metro working households still have no formal retirement provision at all.
“Cash savings (be they banked or unbanked) have fallen, in line with other indications of depleted reserves for emergencies. Stokvels, too, show some decline both in terms of penetration and contribution rates. While these results to a large extent reflect the remarkable ability of households to re-calibrate, the reality is that the sharp loss of confidence in the South African economy that we saw in 2016 is continued in this measure,” says the Old Mutual report.
Letswalo contends that saving is an integral part of financial literacy: the Transport Sector Retirement Fund raises members’ awareness on key concepts of money management.
“The fund is committed to acting as a responsible South African corporate citizen by demonstrating our commitment to economic sustainability and the financial wellbeing of our members.
“One of our goals is to instil a culture of savings and effective resource management among our members that extends beyond the financial sector to all spheres of life including energy, healthcare, and water, for example.
“Our aim is to make members aware that saving is a lifestyle choice,” says Letswalo.
He says one of the manifestations of low savings in the country is the trend of people working past normal retirement age, because they cannot afford to retire.
“Savings are also vital for the growth of a country’s economy, because when the business sector or government is in need of capital, they access it via available savings through financial intermediaries. However, if we do not save enough to meet the country’s financing needs there will be insufficient funds available to finance investment in business, government or social infrastructure.
“The Transport Sector Retirement Fund is mindful of the fact that our members’ savings that are invested through financial intermediaries help increase economic activity, economic development, and job creation.
“Our members’ savings are helping the country to grow stronger,” says Letswalo.