While the majority of people within a pension fund the size of Thacsa share common retirement investment goals there are individuals who have specific needs based on their own unique circumstances. We have introduced two investment strategies to ensure that members are able to tailor a programme to suit their needs; they are the life-stage and individual member choice models.
1. Life-stage investing minimises the risks
Thacsa is a Defined Contribution Fund. Your monthly contribution plus that of your employer less the deductions are invested for your retirement. If the Fund performs well you benefit accordingly. However, you also carry the risk if the Fund does not. The introduction of life-stage investing is a way to minimise the risk according to your age and closeness to retirement.
What is life-stage investing?
The younger you are – the more time to actual retirement you have – the more risky your investment strategy can be. Obviously in the pension space risk is a relative term. As you get closer to retirement the more secure your investment strategy should be.
The aim of the life stage model is to provide you with the right amount of exposure to risk based on your age. If you have more than 10 years to retirement you should still have enough time to recover should there be a negative return. The opposite will apply to members 50 and older, they can’t afford exposure to negative returns so close to retirement.
How does it work?
The life stage model consists of two investment portfolios; the Growth Portfolio and the Capital Protection Portfolio.
• If you are younger than 50 years old your Fund Credit will be invested in the Growth Portfolio.
• From age 50 to 59 years old your Fund Credit will be moved over to the Capital Protection Portfolio in 10 instalments.
• Once you turn 59 you will be fully invested in the capital Protection Fund.
There is still flexibility if required
The Trustees understand that members have different needs when it comes to retirement investment savings. Life stage does provide members with some individual flexibility when allocating funds to a specific portfolio that may better suit their needs.
2. Individual member choice
In addition to the two investment portfolios available on the life-stage model, the individual member choice option brings in a third choice – the Money Market Portfolio.
This table outlines the goals, risks and benefits of each of the three portfolios.
|The portfolio||The goals||Exposure to risk and potential returns||Is this good for me?|
|The Growth Portfolio||Provide you with the best possible returns over the long term, but you will be exposed to market volatility over the short term||The portfolio is structured to perform in line with the target of 5% above inflation over the long term.||You have many years before retirement. You can afford to take more risk in the short term to grow your investment over the long run.|
|The Capital Protection Portfolio||To protect your investment over the short term by smoothing out investment returns and providing an element of capital guarantee.||The portfolio is structured to perform in line with the target of 4% above inflation over the long term. This is slightly lower growth but more stable returns.||You are approaching retirement age and can afford some exposure to risk, but also want to start protecting your savings for retirement.|
|The Money Market Portfolio||To provide returns that are driven by the level of interest income, thereby protecting your investment so that you do not experience negative returns.||This portfolio has the lowest risk, but also delivers the lowest returns.||You are at, or very close to retirement, and cannot afford to lose capital for the sale of trying to earn further returns on your investment.|
Individual member choice explained
When can I transfer to the investment portfolios of my choice?
You can switch from one portfolio to the other at any time during the financial year. Or you can switch back to the life-stage model at any time. If you switch back to the life-stage model, your investment will be allocated into the two portfolios based on your age at the time.
Do I have to transfer my full Fund Credit into a specific portfolio?
No, you have the option to share your Fund Credit across the various portfolios. Your future contributions, including any additional voluntary contributions, will be invested in the same way.
Are there any charges?
Your first switch during a financial year is free. Switches there after – in the same financial year – are charged at R342 including VAT. This fee is deducted from your Fund Credit when the switch is made.
How do I know which combination of the three portfolios will suit me?
Before making any decision that affects your retirement planning it is advisable to contact an accredited financial advisor or your broker. Every person’s financial situation is unique and it is worth obtaining professional advice.
Or register as a web user and submit it online:
o Click on the login/Register button alongside
o You will be directed to the Momentum page, mouse over LOG IN on the top right
o A drop down menu listing various pension funds will appear, select Thacsa and click on it
o When registering for the first time you are required to enter your ID number, employee number and email address
o Then enter and confirm a password of your choice.
Or access the site through your smartphone:
o Go to the App Store for iPhones or Google Play for Android phones
If you need more information or assistance with the life stage investing model please contact the Helpdesk.