Cyber security a major blind spot in retirement fund industry - expert
Cyber security is a major blind spot in the retirement fund industry, according to Viresh Maharaj, chief executive at Sanlam Corporate: Sales & Marketing.
He said consultants in the industry are not equipped or even aware of the need to evaluate the various administrators and insurers in the industry in terms of their cyber security.
In his view, the expanded types of data on individuals that insurers of group risk policies and fund administrators are now required to keep - and keep updated - creates a further cyber risk as an unintended consequence.
These types of group risk policies are usually taken out by employers to insure their employees. Data held by group risk insurers can include an individual member's ID number, employee number, beneficiary details, date of birth, salary, tax number and more.
At a media briefing on Thursday, Maharaj also provided some of the initial findings of the Sanlam Benchmark 2019. The annual survey on the retirement fund industry provides insights from industry stakeholders to enable financial resilience of fund members.
According to Maharaj, a hot topic in the survey over the past three years has been the growth of severe illness benefits.
"This has become one of the fastest-growing benefits in the employee benefit industry - especially given the increased prevalence of cancer," said Maharaj. "So, it is being seen as a necessary inclusion in the suite of risks insured."
The survey also indicates that healthcare seems to be regarded by employees as more important than retirement funding in their employee benefit package.
"The immediacy of healthcare needs on a family takes a higher priority in people's lives," said Maharaj. "Medical aid cost is one of the biggest stresses for employees, our research shows."
That indicates a need for primary healthcare products to provide lower income earners with access to a range of private healthcare services and allow those insured to receive a level of care they would otherwise not get. This will also allow employers to get their staff back on their feet and enable greater productivity more quickly, in the view of Maharaj.
The survey also found that the cost of healthcare is becoming increasingly prohibitive.
Another trend picked up from the survey include that the focus of consultants will turn to engaging with individuals forming part of retirement funds, to enable better financial decision making.
Employee benefit consultants indicated that there is an increased appetite for automation and self-service by employers and fund providers. Simplification and transparency are other aspects regarded as important.
Although the survey indicates the importance of delivering value for money, Maharaj said that consultants are wary that there should not be a fixation exclusively on reducing costs.
"Their view is that conversations with clients are becoming one-dimensional to the actual detriment of clients as they may not consider other factors that more meaningfully impact members' financial resilience.
"Cost is what you pay, and value is what you get. Consultants are looking for greater appreciation among clients' value and not just a focus on cost," said Maharaj. "They also want to see that individuals take ownership of their journey to retirement and become far more engaged in the process."