You Will Retire, So Get Ready Now!

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Benjamin Franklin once said the only certainties in life are death and taxes. To that you can add retirement (assuming the Grim Reaper doesn’t interfere earlier). Yet research shows that no more than 10% of us can retire comfortably.

What to do in 7 steps
  1. Get rid of your debt. Remember interest on your debt compounds and you don’t want to divert your retirement income to paying off debt. Also if you are married in community of property or your heirs have signed as surety or guarantor, they will be responsible for your debt after your death.

    The only exception to getting rid of your debt would be if the income and dividends you receive exceed the cost of your debt. Whilst this may hold now, you should ascertain that this will continue into the future.

  2. Save! As with the cost of debt compounding, so amounts put into retirement funding will also compound and realise more income on your retirement. Don’t forget there are generous tax incentives to help grow your retirement funding – you are allowed to deduct 27.5% of your retirement funding from your taxable income.  Ask your accountant to help you find the most tax-efficient method.

    Saving is a mentality. Once you get the habit it can be amazing how much you can save. So save now.

  3. Limit withdrawals.  Be extremely prudent when you have to withdraw any savings – weigh up the cost to your retirement and only take out the minimum you require.

  4. Rainy days.  No one goes through life without some form of crisis. We live in an age of uncertainty. Put aside funds for this as you don’t want to eat into your retirement funding to cover a crisis.

    In the unlikely event, you don’t ever need to use this rainy day money, it will add to your retirement savings and improve the quality of your retirement. For example, you could even retire earlier.

  5. Keep retirement top of mind.  It pays to constantly review your retirement funding, particularly when important events happen such as a decision to take on a new job or make a major investment.

  6. Plan and remain flexible.  Be prepared to react if obstacles to your retirement arise. If, for example, the value of your investment portfolio declines and you discover you won’t have enough to retire comfortably, find out if you can work say one or two days a week on contract at your firm. Otherwise, see if you can land a part-time contract at another business.

  7. When is enough actually enough?  Many people have doubts as to whether they have enough to retire and delay their retirement. You need to be disciplined about this – if you and your retirement adviser have set targets for retirement, stick to them unless unplanned events make it impossible to achieve your target.
This is a dynamic process and things can change quickly, so always keep this high on your agenda.
Don’t be one of the 90% – take steps to be part of the 10% who save enough to enjoy a stress-free retirement.

Staff Dismissals: Beware, There’s No Honour Amongst Thieves and No Short Cuts

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“A plague upon it when thieves cannot be true one to another!” (Falstaff, in Henry IV Part I)

We know how time consuming dismissing staff can be. It leads to loss of productivity and extra legal costs can be incurred. But be careful if you are considering taking short cuts to get the matter out of the way. A recent case illustrates this.
The employer’s quandary
An employee’s position was terminated after the employee resigned (that, at least, was the employer’s version – the employee characterised it as an unfair dismissal/retrenchment in the CCMA). Soon afterwards, said the employer, the employee’s union asked the employer to change the reason for leaving employment to “retrenchment”. The employer was placed in a quandary – to refuse the request meant the employee would almost certainly approach the labour courts for wrongful dismissal. To agree to the union’s request would ‘make’ the problem go away as the employee would then be able to apply for and receive UIF benefits.

The employer agreed to the union’s request. The bad news was only just beginning as the employee promptly went to the CCMA claiming, amongst other things, that she had not been paid her retrenchment package. The CCMA arbitrated the case as a retrenchment dispute – the employer having agreed to present the “resignation” of the employee as a retrenchment during the arbitration – and found in favour of the employee.
Naturally the employer was furious – not only had it ended up in a labour forum but it had also been required to pay a retrenchment package. In essence, to appeal meant exposing the employer to the risk that that the case would be seen as fraudulent all along.

It just gets worse

However, the employer did appeal the case to the Labour Court. In the appeal the employer had to argue that the employee was never retrenched. The Court was understandably angry that a fraudulent claim had been entered and the employer had never raised this in the original hearing.

The appeal was dismissed with some strong wording: “The court turns its face against any fraud, particularly fraud perpetrated in respect of the processes that bear on the administration of justice……It is remarkable that the [employer] has the temerity to seek recourse from a court of law in the light of its admitted fraud. The conduct of the applicant is a perversion of the administration of justice.”

Don’t take the easy way out – there is no honour among thieves. The employer’s business not only spent far more time and money on two cases but also suffered reputational damage as well.

Vet Your Suppliers! Good Stakeholder Relationships Will Boost Your Profits

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Suppliers play a strategic role in your business because if they fail to deliver on time or with the required quality, they can cause delays in your organisation. These delays will inevitably have a knock-on effect to your customers.

How to ensure you get high quality suppliers

Best practice dictates that vetting procedures are in place that cover, at least:

  • A review of the supplier’s financials to establish that the business has the financial means to remain sustainable and to deliver to its customers.
  • The supplier has sound processes in place and the organisation is well managed.
  • How long has the entity been in business? The longer the better.
  • Get testimonials from the supplier’s current customers.
  • Check for fraud and/or conflicts of interest. This involves establishing that none of your staff have undisclosed relationships with the supplier, that the supplier has no criminal record or any suspicious activities.
  • See how the supplier responds to queries. You could call as “customer” of the supplier and see how they react to a problem.
  • Check their social media platforms to ensure they are consistent with their marketplace persona.
  • Culturally are they a good fit for your business? Do they have the same values as your organisation?
  • Have in place ongoing processes to detect if there are any changes in the supplier’s organisation which could trigger further investigation.

Getting the most out of suppliers

In the new King IV Report there is a section on optimising stakeholder relationships by an “inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time”.

This involves understanding what they want and ensuring there is a mutual relationship of trust which will last a long time and from which both parties will get the outcomes they want.

An honest, transparent relationship with your suppliers will bring good long term profit to your business.