Much still to do for SA women to achieve fi­nan­cial free­dom

Em­pow­er­ing women in the re­tire­ment in­dus­try is cru­cial

Mail & Guardian - - Irfa - Alf James

Only 28% of se­nior man­age­ment roles in South Africa are held by women ac­cord­ing to the lat­est Women in Busi­ness re­port. Twenty-three years into our new democ­racy and gen­der equal­ity and the role that women play — par­tic­u­larly in the re­tire­ment and fi­nan­cial sec­tor

— is still a con­cern, ac­cord­ing to Geral­dine Fowler, deputy pres­i­dent of the IRFA.

She main­tains that em­pow­er­ing women, ad­vanc­ing their roles in the re­tire­ment in­dus­try and pro­mot­ing the art of re­tire­ment sav­ing among women is of ut­most im­por­tance.

Ac­cord­ing to a Grant Thorn­ton re­port on women in busi­ness in 2015, about 39% of lo­cal busi­nesses do not have any women in lead­er­ship po­si­tions and women hold only 23% of se­nior po­si­tions in South Africa — down from 27% a few years ago.

“High­light­ing the role of fe­male par­tic­i­pa­tion in the re­tire­ment in­dus­try is key for us. In con­junc­tion with the goal of at­tract­ing more women into ex­ec­u­tive po­si­tions in the in­dus­try, we also want to em­power women to em­ploy re­tire­ment sav­ings as a safety net for them­selves and their fam­i­lies.

“It be­comes im­per­a­tive for fi­nan­cial and re­tire­ment in­sti­tu­tions to of­fer women in­for­ma­tion and aware­ness about the im­por­tance of sav­ing for re­tire­ment at an early age through work­shops and sem­i­nars,” says Fowler.

Re­search shows that com­pared to men, women are sav­ing far less for re­tire­ment and see re­tire­ment sav­ing as a lower fi­nan­cial pri­or­ity, al­though more women are mak­ing great strides fi­nan­cially.

Fowler says in­for­ma­tion on re­tire­ment sav­ing is crit­i­cal to lessen so­cioe­co­nomic re­liance on the state.

“We know that sav­ing for re­tire­ment is tough for some women, so by em­pow­er­ing them through fo­rums such as our con­fer­ence, we be­lieve they can be en­cour­aged to en­hance their sav­ing skills.

“The role of the an­nual IRFA con­fer­ence is to as­sist in ed­u­cat­ing and in­form­ing re­tire­ment in­sti­tu­tions about im­por­tant is­sues such as how in­vest­ing in a re­tire­ment fund at an early stage, es­pe­cially for women, can as­sist in fi­nan­cial free­dom,” says Fowler.

El­ize Botha, man­ag­ing di­rec­tor of Old Mu­tual Unit Trusts, agrees with Fowler. She says ac­cord­ing to the re­sults of the 2017 Old Mu­tual Sav­ings and In­vest­ment Mon­i­tor, de­spite sig­nif­i­cant ad­vance­ment, many work­ing metropoli­tan women still feel less con­fi­dent that they will make good sav­ing and in­vest­ment de­ci­sions com­pared to men, de­spite the fact that many women are highly ed­u­cated.

The mon­i­tor re­veals that with the ex­cep­tion of tech­ni­cal qual­i­fi­ca­tions and post bachelor de­grees, the amount of metropoli­tan work­ing women who hold ma­tric cer­tifi­cates, col­lege and univer­sity bachelor de­grees is 8% higher than men.

“Yet, when rat­ing their abil­ity to make good sav­ings and in­vest­ment de­ci­sions, 33% of women in the mon­i­tor rated their fi­nan­cial con­fi­dence lower than five out of 10 (this num­ber was only 26% for men),” says Botha.

“Fur­ther­more, only 68% of women rated their con­fi­dence level higher than six out of 10, com­pared to 75% of men when asked the same ques­tion,” she adds.

Botha be­lieves the goal of achiev­ing fi­nan­cial se­cu­rity and in­de­pen­dence should be a pri­or­ity for every South African woman.

“Life is un­pre­dictable, and with our coun­try’s in­creas­ing preva­lence of di­vorce, cou­pled with the cur­rent tough eco­nomic en­vi­ron­ment, it’s crit­i­cal that women feel em­pow­ered to make sound fi­nan­cial de­ci­sions.”

The mon­i­tor also re­vealed that women still feel less fi­nan­cially se­cure than men.

“Our data shows that 32% of women, as op­posed to 26% of men, feel they don’t have suf­fi­cient fi­nan­cial se­cu­rity to sur­vive an un­planned emer­gency,” says Botha.

“De­spite how women (or men) view their cur­rent fi­nan­cial sit­u­a­tion, fi­nan­cial free­dom and the se­cu­rity it brings is at­tain­able by South Africans. It’s not pos­si­ble for ev­ery­one to be­come wealthy, but it is pos­si­ble for all of us to be fi­nan­cially free.”

The mon­i­tor also shows that, on av­er­age, 16% of house­hold in­come is spent on re­pay­ing debt.

“This per­cent­age is not sus­tain­able and means that many house­holds will never reach fi­nan­cial se­cu­rity. De­spite hav­ing a high in­come, a big house, or a fancy car, the prin­ci­ples of per­sonal fi­nance are univer­sal — your in­come should al­ways ex­ceed your ex­penses. As long as you’re be­holden to your credit card or car re­pay­ment, you are not fi­nan­cially free.”

The sec­ond step in achiev­ing fi­nan­cial free­dom is to cre­ate an al­ter­na­tive in­come stream us­ing an in­come-gen­er­at­ing in­vest­ment.

“Us­ing an equity-based in­vest­ment ve­hi­cle such as a unit trust will grow your wealth and, later, gen­er­ate a suf­fi­cient sec­ond in­come that can be at least as great as your ex­penses. From a monthly pre­mium of as lit­tle as R500, a bal­anced port­fo­lio unit trust is de­signed to help you reach fi­nan­cial free­dom and should be bet­ter at pro­vid­ing in­fla­tion-beat­ing re­turns over the long term,” says Botha.

“Sav­ing enough money to be fi­nan­cially free may feel like a ‘long shot’, but the first step is al­ways the hard­est. Don’t be in­tim­i­dated by your goal, or put off by po­lit­i­cal com­men­tary or mar­ket noise — just start to­day.”

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