South African Retirement Funds Hit By Recession

January 19 - With over one million people in South Africa being made unemployed last year, many people are turning to their retirement funds for extra income.

A number of financial groups have reported a steep increase in the number of people dipping into their retirement funds, such as Old Mutual which recorded a staggering 17,000 + withdrawals from umbrella retirement funds in 2009.

While many employers are trying their best not to make staff redundant, they are seeking other ways to cut expenses, and these include closing funds, cutting contributions or limiting benefits.

However, financial experts have warned that workers are at risk if their contributions are suspended or discontinued.

Areas that may be affected could be group life and disability assurance, as well as funeral insurance.

Experts suggest that workers should negotiate with their employers so that they are able to keep partial coverage instead of having it cancelled altogether.

It is important for people to remember that should they lose their cover, or have it reduced, they should take out new individual cover against death and disability.

It is up to the retrenched worker to ensure that they remain covered and that any extra premiums are covered by them.

The rules and regulations of retirement funds differ and employers may or not terminate a fund without first consulting with workers.

Workers are also warned to seek advise from financial professionals who will be able to guide them in their decisions.