My Money Matters Toolkit - Starting a new job

Options when starting a new job

Starting a new job is a big change. You may need some help to make good decisions as you start your new job.

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There are two important decisions you need to make now

Starting a new job often leads to making other changes in your life that affect your finances

Other useful information about your retirement fund

Your two important retirement savings decisions

How much should I save each month towards retirement?

Find out more

What to do with my retirement savings from my previous employer.

Find out more

To help you decide, find out more about your options by

Watching this video, or
Reading this brochure.

If you’d like to keep your retirement savings invested for your future self to reduce the risk of not having enough to live on after you retire, these are your options.

Tip!
Keep your retirement savings invested for their real purpose - to provide you with income when you're no longer working. Avoid withdrawing cash from your savings pot during the year and when you change jobs.

Find out more about your retirement savings options as you prepare to start your new job

For information that’s specific to your fund or employer’s benefits find out more

Watch

this video for more about your retirement savings options

Read

your retirement fund welcome letter

Read

this flyer to find out more about the importance of having a will and keeping your beneficiary nomination form updated

What type of investment portfolio should I choose if my fund offers me a choice?

Find out more

Is someone you know starting a new job?

Share this information with them. It will help them through the decisions they will need to make when it comes to their retirement savings and changing employers.

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First important decision: How much should I save each month towards retirement?

Starting a new job brings an opportunity to reconsider many things in your life, including your financial habits. Choosing how much to save for your future self each month is easiest if you know what matters to you, what your goals are and you have a plan to get you there.

How much of your salary would you like to contribute every month? Choose the percentage from the options offered by your fund. The more you contribute towards your savings, the more income your future self will receive!

Watch this short video clip to help you decide how much to save for retirement every month.

How to decide how much to save:

Work out how much you can afford to save. This is referred to as budgeting. Make a list of what you spend and compare that to how much you earn. Look for places to stop or decrease expenses if you need to.

If you’d like to use our budget tool to help you with this step you can register or login here to use it.
Or you can build your retirement picture to see how much pension you are on track for and compare that to the expenses you’ll have.

If you’d like help to work out how much you need to save to reach your goals, you can speak to a financial adviser.

Speak to your HR department to get a copy of your fund's member booklet so that you can see what contribution rates are available.

Second important decision: What to do with my retirement savings from my previous employer?

If you’re leaving your job for a new position and your previous employer provided a retirement fund as one of your benefits, then you have an important decision to make: you’ll need to decide what to do with your retirement savings that are in your old employer's retirement fund.

The most important step you can take towards having enough to live on when you retire is to keep all your retirement savings invested when you change jobs so they can continue to grow.

Speak to your HR department to get a copy of your fund's member booklet so you can see what your options are.
Watch this video to help you decide what to do with your retirement savings, or
Read our brochure.

Get on top of debt

Two important things that help you stay on top of your debt:

Keep track of your credit report. According to the National Credit Regulator, you are allowed to access your credit report once a year for free. Visit NCR to find out more.
Using debt wisely.

Know your credit score

Credit bureaus calculate your credit score based on your spending and how you manage your finances. They will give your credit report to any shop or financial company that you request a store card from or apply to for a personal loan. Make sure you know what’s on your credit report and that it’s all correct. Review your credit report at least once a year to assess and improve your position, if need be.

You can request your credit report from any of the major credit bureaus.

Some tips if you are thinking about borrowing money.

Be honest about how much you can actually afford when applying for credit. Don’t guess your expenses. Use your actual expenses from the last year and make adjustments for any increases you think are likely to have in the future.
Understand what you are signing and agreeing to in all the terms and conditions.
To pay off your debt faster, you need to pay more than your minimum monthly installments. It’s generally a good idea to try to pay off your most expensive debt (debt with the highest interest rate) first.

A debt-to-income ratio is calculated as follows:

Monthly debt repayments monthly salary before tax 100.

What type of investment portfolio should I choose if my fund offers me a choice?

You or your employer make contributions to your retirement savings every month.

Why save in a retirement fund?

The purpose of saving in a retirement fund is so that you have enough money to live on when you retire from your employer one day.

Your retirement savings at Alexforbes are made up of:

You can use your retirement savings to buy a pension that gives you a regular income when you retire from your employer. The pension you get is affected by the amount of retirement savings you have and the cost of buying a pension.

What is investment performance?

The percentage increase or decrease in the value of investments over different time periods.

How investments affect retirement savings

Investments are an important part of any retirement fund. The value of investments in your retirement fund’s portfolios affects the amount of retirement savings you will have available to buy a pension when you retire. We expect the value of investments that retirement savings are invested in, to increase over longer periods of time although they can decrease in value over shorter time periods. This is the reason why it’s important to focus on longer time periods like 5 to 10 years when you look at your retirement savings.

Who decides what investments a retirement fund should have?

It’s important for each retirement fund to have a well-thought-out investment plan so that your retirement savings can grow over time. The trustees of your fund create an investment plan with the help of professional advisers. The trustees may choose to offer a range of investment portfolios so that the members of the retirement fund have some options to choose from. In most cases, there will be a default option that is suitable for most people.

If, like most people, you aren’t an investment expert, there are two very important ways to make sure you have enough money to live on one day:

Keep your retirement savings invested when you change jobs
- Watch this video to find out more. Small amounts can grow into large amounts over a long period.
Save as much as you can
- Watch this video to find out more.

You can find out more about the different types of investments and learn about investment risks here.

Other useful information about your retirement fund

What’s a retirement fund?
When you’re no longer earning a salary at the end of your working life, you can use your savings in your retirement fund to buy a pension that will give you regular income. Your employer has provided you with a provident or pension fund.

How does a retirement fund work?
- Every month, you, your employer or both make contributions to your fund.
- One-third goes into a savings pot and the other two-thirds goes into a retirement pot. This is called the two-pot system.
- You can withdraw from your savings pot once in a tax year (1 March to 28 February). Your retirement pot must, by law, be preserved until you retire.
- You can use your retirement savings to buy a pension that will give you a regular income in retirement.
How much your pension will be depends on:
- how much you or your employer contribute during your working life
- how investments have performed
- whether you keep the money in your savings pot invested instead of withdrawing from it
- the cost of buying a pension when you retire
What is a benefit statement?
A benefit statement shows:
- how much you’ve saved in your savings pot and your retirement pot so far
- the pension you can expect based on the information we have about you
Here’s an explanation of your benefit statement.
View your benefit statement by registering on AF Connect. Your benefit statement will tell you how much you’ve saved and which portfolios your savings are invested in. You can also download the AF app on the Apple App Store or the Google Play Store.
Can I add extra money to my retirement savings?

The rules of your fund will tell you if you can make extra contributions to your retirement savings in addition to your monthly contributions. These are called ‘additional voluntary contributions’. It is very important to contribute as much as you can every month.
Is there a specific amount I must pay towards my retirement savings?

You can choose a contribution amount from the options that are provided in the rules of your fund. It is very important to contribute as much as you can every month. You can find out more about your contribution options in your member booklet (which you can get from your HR department).
Can I increase the amount I’m saving towards retirement?

If your fund offers more than one contribution option, then you can usually change the amount you are contributing to retirement once a year or more often, depending on your retirement fund rules. You can ask your HR department more about this option. Contributing more will give you a better chance of having enough to live on when you retire from your employer.
Is there a specific amount I must pay towards my retirement savings?

You can choose a contribution amount from the options that are provided in the rules of your fund. It is very important to contribute as much as you can every month. You can find out more about your contribution options in your member booklet (which you can get from your HR department).
How much does my employer pay?

Your employer might contribute an amount based on your pensionable salary, depending on the rules of your fund. Your pensionable salary (or fund salary) is the part of your salary that your retirement savings contributions are based on.
Do I pay any fees?

Yes. The costs of running and administering the retirement fund are taken from contributions. You can find the details of these costs in your member booklet.
How does the performance of my retirement fund’s investment portfolios affect my retirement savings?
If you’re a member of a defined benefit fund, investment performance doesn’t directly affect your retirement fund savings.

Most members belong to defined contribution funds. In a defined contribution fund, the value of investments in your retirement fund’s investment portfolios do affect your retirement savings.

Find out which type of fund you belong to by asking your HR representative or logging onto our website to check your statement.

There are two main things that affect the value of an investment portfolio:
1. Conditions in investment markets
  - Over shorter periods of time – days, weeks, months and sometimes even years, investments can decrease in value. Sometimes different types of investments all decrease in value at the same time.
  - Over longer periods of time, we expect the investments in your retirement savings portfolio to increase in value.
2. How well the investment managers do
  - Alexforbes Investments chooses the investment managers that manage the money in your investment portfolio.
  - We choose the investment managers very carefully to make sure that they manage the money in retirement savings portfolios responsibly and professionally. We monitor these investment managers on an ongoing basis.
  - We also choose a mix of managers who we think will give your retirement portfolios the best chance of growing more than other portfolios.
  - Over shorter periods of time, retirement savings portfolios may not do as well as other portfolios. This is because we choose and mix investment managers based on what we believe, based on our research, will be best over longer periods of time.
What is the difference between single and multi-managers?
- A single investment manager is a manager of investments (asset classes).
- A multi-manager is a manager of investment managers.
Multi-managers don’t actually buy and sell asset classes, but rather manage the investment managers, who do this on their behalf. Ultimately, multi-managers blend the best assets to give the most appropriate investment management solution. To achieve this they:
- Assess a fund’s investment needs.
- Match these investment needs with a combination of single managers to meet them.
- Monitor the investment managers to make sure they deliver the required performance.
A good multi-manager combines the services of selected single managers based on their proven ability in individual areas of expertise, depending on the fund’s particular investment requirements.
Am I saving enough?

Knowing if you’re on track is an important first step to reaching your goals. Use our fun gamified tool to build your retirement picture and find out if you’re on track and what you can do if you’re not on track.