Why umbrella funds make so much sense
The move to multi-employer umbrella funds has been accelerating as companies, members and Government-driven retirement reform search for greater cost efficiencies.
The Finance Ministry has indicated they are exploring how to give members early access to a portion of their retirement savings to help those hard-hit by the pandemic.
Nashlin Portrag, Head: FundsAtWork at Momentum Corporate, says with most employees already saving far too little for retirement, it’s critical to put the right guard rails in place to manage this access and find the most cost-efficient way to save for retirement.
"This is one of the key reasons Government supports the trend towards multi-employer umbrella funds, which use economies of scale to unlock cost-efficiencies and channel these cost savings towards members’ retirement savings,” says Portrag.
However, some employers are hesitant to make the move due to various misconceptions. One is that the process of moving employees to an umbrella fund is disruptive. Portrag says that Momentum Corporate has worked on a number of these migrations and while complex, their fine-tuned migration model avoids disruption by tightly managing three key areas:
- Professional project management of the many moving parts.
- Wind-up procedures for the existing fund and the transfer of assets.
- Employee engagement that empowers employees to make informed choices.
We focus on the needs of all employees, which is why we pioneered the first hybrid solution about two years ago. This allows employees to stay on their existing fund or move to the umbrella fund. Many younger employees, who find the umbrella fund value proposition particularly appealing, typically opt to move and benefit significantly from the cost savings on their journey to retirement.Nashlin Portrag, Head of FundsAtWork - Momentum Corporate
They also benefit from the attractive value-added benefits and digital platforms that umbrella funds like FundsAtWork offer.Nashlin Portrag, Head of FundsAtWork - Momentum Corporate