Packaging giant Nampak recently moved a standalone retirement fund to an umbrella fund, the Old Mutual SuperFund. Consultant and Independent Principal Officer Belinda Phillips, who was instrumental in the move, describes the move and explains why it was in the best interests of the fund members.

00:00 Why Nampak chose the Old Mutual SuperFund
00:36 What was the process Nampak used to select Old Mutual SuperFund?
01:35 What was Nampak’s transfer experience like?
02:10 What about Old Mutual SuperFund stood out for you?
02:54 The governance processes
03:48 How has the experience been since moving into Old Mutual SuperFund?
05:17 Why would you recommend an employer move to Old Mutual SuperFund?

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Nampak is a leading packaging company in Africa that has recently made the switch from a standalone retirement fund to an umbrella fund. This move has raised questions among their employees and stakeholders about the reason behind such a change. Here are some possible reasons why Nampak made this decision:

1. Cost Savings

One of the main reasons for moving to an umbrella fund is cost savings. A standalone retirement fund requires significant administrative costs, and when this is spread among a smaller group of members, the costs per member are higher. An umbrella fund, on the other hand, pools together members from various companies, spreading the administrative costs, and reducing the costs per member.

2. Better Investment Options

An umbrella fund has access to a wider range of investment products, which may translate to better investment returns. The fund may invest in multiple asset classes, including stocks, bonds, and real estate, which can potentially increase returns and lower risk.

3. Portability

When an employee leaves a company that uses a standalone retirement fund, they are generally required to transfer their retirement fund to another fund or cash it out. However, an umbrella fund allows portability, meaning an employee can move the retirement fund from one employer to another without cashing out or transferring it. This ensures that the employee’s retirement fund stays intact and avoids any penalties or taxes that may come with cashing it out.

4. Pooling of Risk

An umbrella fund pools together the retirement savings of various companies’ employees, which reduces the risk for each individual member. This pooling of risk means that the fund can better absorb any financial shocks or market fluctuations, which may impact investment returns.

5. Greater Expertise

An umbrella fund is typically managed by a professional investment manager with extensive financial knowledge and expertise in managing institutional funds. This ensures that the fund is managed efficiently and effectively, thereby protecting the retirement savings of the members.

In conclusion, there are numerous reasons why Nampak chose to move from a standalone retirement fund to an umbrella fund. The move is expected to provide cost savings, better investment options, portability, pooling of risk, and greater expertise in managing the fund. The decision is a positive one for the employees of Nampak, and it may encourage other companies to follow suit.