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19 Oct 2018 00:00
Garth Barnard, director at Moruba Consultants & Actuaries
The Transport Sector Retirement Fund (TSRF) differentiates itself from many other funds by its single-minded drive to benefit members. The fund’s shareholders are its members.
The fund is non-aligned and is a stand-alone, which is helpful in its efforts to maximise members’ returns.
All the proceeds of the fund’s activities are reinvested, ultimately benefiting members’ retirement savings.
For example, through the fund’s self-insurance it has generated in excess of R500-million. Had it obtained insurance from a private insurance company, this would have gone into the profits of that organisation, but TSRF was able to retain it, improving members’ savings and increasing their benefits.
The fund recently improved members’ death and disability benefits from two-times annual salary to three-times annual salary, and funeral cover from R30 000 to R50 000 for the member and spouse, which was made possible by the fund’s very strict non-profit orientation that enabled it to increase members’ benefits by ploughing the profits back into the fund.
This makes the TSRF highly competitive, both from cost and benefits perspectives.
And the improvement of benefits isn’t stopping. The fund is investigating other means of increasing benefits to support members’ families. One possible example is the setting up of a benefit bursary fund, whereby members’ children can be considered on merit for academic funding; another is improving health and safety conditions that promote members’ wellness during work and its strong focus on investing directly in truck stops. These generate good investment returns but also directly benefit TSRF members on the road, which allows them to benefit before retirement.
Garth Barnard, director at Moruba Consultants & Actuaries, explains that although most retirement funds’ main objective is retirement benefits, they offer a death and disability benefit to provide extra cover for the members and their beneficiaries in the event of death or disability.
“TSRF, with 70 000 members, was able to realise a long-term saving by self-insuring and bring the risk in-house, instead of paying the profit margins to an insurer.
As a result, the TSRF was able to improve its benefits without changing the contribution rate and were able to build up their reserves to the point that being self-sustaining.”
Barnard says the fund moved onto full self-insurance from March 1 2018, which means contributions are being added to its existing pool of assets that will allow it to improve benefits and add to members’ retirement savings without them or their employers contributing more.
“Any extra surplus the fund makes is given back to members. This is directly improving members’ benefits, particularly their retirement savings, which is what the fund was originally created for,” says Barnard.
He says the next exciting development is the TSRF opening up to more members and employers from the transport sector who were historically not part of the Bargaining Council.
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