How A Group RA Can Empower Your Staff

Increased employee engagement is more likely when employers illustrate that they care about the future of their staff. Employers who provide retirement solutions and investor education are more likely to see happy and engaged employees.

The job market is moving away from life-long employment. The modern workforce is extremely mobile. The benefits employers offer are often the key to attracting and keeping staff. A retirement annuity (RA) fund is one of these benefits.

An RA can be thought of as a personal retirement plan. They are designed for the individual. An RA can move with the employee and is not linked to the employer, thus becoming a life-long benefit. The message an RA conveys is that an employee’s future is of the utmost importance.

You can manage RAs on a group basis through a group RA system and it is often the better choice for employers and employees alike. Other funding options, such as umbrella funds, typically have high setup costs and administration requirements, which can prove quite time consuming.

A group RA system allows employers to have the time to manage their business and shields them from tedious administrative requirements. This is quite attractive to small and medium size businesses. With a group RA system, employees have access to all the benefits of an RA that is individually managed. These benefits include:

Individual choice and accountability

An employee can join in their individual capacity, giving them control of their retirement savings. Employees can choose from a variety of unit trusts to align with the individual goals. Their selection must, however, comply with the legal investment limits for RAs. Employees are allowed to switch, but it is usually advised against.

An employee can make use of a single independent advisor or bring in their own personal advisor if any help is needed with investment decisions.


Tax Advantages

You can receive tax deductions for RA contributions (within certain limits). The returns earned by employees invested in an RA are also tax-free. Any lump sum taken at retirement will be taxed. This is done according to the retirement tax tables. The portion that is transferred to a pension-providing product will also be taxed at the marginal rate when paid out as income.


You get value for your money

Fees typically depend on the unit trusts selected by employees. Investment administration and management fees can be charged within the unit trusts and deducted before the performance is published. It’s important to try and have a few of the best performing unit trusts in order to offset the fees each year. As the employee goes along, no additional fees are taken off the initial investment or investment balance. There may be fees associated with financial advice, but these must be negotiated with the advisor. There are no switching or exit fees. Additionally there are no fees related to managing multiple RAs in a group system.


They are flexible

A big advantage of group RAs is that they are very flexible when it comes to contributions and have no penalties:

  • Employees may (at the employers discretion) start/stop contributions.
  • Employees may (at the employers discretion) increase or decrease their contributions.
  • Employers may switch the underlying unit trusts in their portfolio if their goals change.
  • Employees may either stop or continue their contributions if they leave their employer.


Investment protection

An RA is protected from any potential creditors.



Many people don’t retire with financial security. This is largely due to individuals accessing retirement savings and funds before their retirement age. An RA has forced preservation. Typically, the cash is only available after the age of 55. This instills more discipline and empowers people to secure better futures.


Transparency, education and communication

Communication depends on the RA provider. Many of the better service providers out there allow members to monitor and manage their investments online. This is essential to fostering a sense of ownership and responsibility in the investor. Many providers also offer investment education and training.

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