Much still to do for SA women to achieve financial freedom

Empowering women in the retirement industry is crucial

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.”