The South African employment benefit industry is currently worth around R800 billion, comprising retirement funds, medical aid schemes and group insurance contributions. But a pushback against forced membership of retirement funds and medical aid schemes is expected to increase, according to NMG Benefits, one of the country’s largest independent benefit brokers. This is due to rising medical inflation, changing employee expectations and affordability pressures, NMG experts said during a media roundtable on Monday.
Employees empowered … but hamstrung The future of employee benefits is increasingly in the hands of employees because cost-to-company salary structuring is now the default, says Geoff Baars, chair and CEO of NMG. “Very few employers are subsidising medical scheme contributions after retirement. It is a cost that the employee has to bear.” Yet many companies still prescribe membership of a retirement fund and medical aid scheme as a condition of employment.
Friction arises from the fact that the employee is forced to pay for the benefits and is being told which funds or schemes to belong to. ‘People are financially stressed’ “There is no doubt that people are financially stressed,” notes Lettesha Pillay, head of business development at NMG. She says employers are receiving growing numbers of requests for salary advances, staff loans and leave-pay payouts – but many “have stopped offering staff loans for various reasons”.
“The pressure is evident from the letters employers are getting from casual lenders requesting confirmation of employment for them to ensure their loans will be repaid.” Rethink needed by employers? Baars says there is growing support for the idea that people should be free to decide how to spend their own money. The employer should not prescribe to them what to do.
But the employer does have some – at least a moral responsibility – to help their employees make the best decisions.” For example, there has been a tsunami of retirement fund members who have accessed money from their savings pot since the two-pot system was introduced in 2024 – showing the need for financial relief. One concern, based on anecdotal evidence, is that some people are using this money – their retirement savings – to gamble, hoping to hit the jackpot. Retirement savings According to Baars, the biggest portion of the benefit in…
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