When a new job contract lands, most of us skim over it for the key things – salary, leave allowance, and any specifics we’ve asked for, or any red flags. It’s smarter to examine your package for every last bit of value, and then to book a session with your financial advisor to read the contract against the independent policies and investments you already have.
You may be able to build your wealth in unexpected ways during your employment term.
Things to look out for:
- What does the retirement package look like?
Does it give you the maximum allowable tax-free retirement savings? If not, discuss the merits of “topping up” the company retirement option with your own retirement annuity. A chunk of the extra – anything from 18% to 41% – would have been “lost” in tax regardless. Be sure to look at the details of your company retirement savings option.
“You need to understand how the trustees of your company pension will be allocating your contribution,” says Vulani Mampane, Wealth Investment Manager at Absa Wealth and Investment Management. “Is it invested in a life stage-type structure (meaning the allocation is dependent on your age; the younger you are, the higher the equity portion); or are you able to tailor-make the allocation according to your personal circumstances?”
- What does the medical scheme look like?
If there is no medical scheme, your decision is easy – continue with your own and ensure that it still meets your needs. If you don’t have your own, it may be worth looking into joining one. “Late-joiner” penalties, in law, may apply to those who join medical schemes for the first time after the age of 35, so if you’re getting close to that boundary, it’s a relatively pressing decision. If your new job does offer a medical scheme, the group terms are often superior to what you might procure as an independent member, so it’s definitely worth investigating.
- Which other insurances are offered?
Does the employer offer a group life scheme? This would normally pay your beneficiaries three times your current cost to company should you die. “Make sure that beneficiaries on your retirement package and group life scheme are noted and updated as life events take place,” urges Mampane. If there’s dread disease cover and/or income protection, discuss the terms of these with your financial advisor. If they suffice, great. If not, top them up with your own policies.
- Understand the maternity/paternity benefit.
“Most employers realise they lose a percentage of female employees who opt to stay home or adopt a flexible schedule once they have a child,” says Mampane. “We have seen some change from employers. They are now affording women an opportunity to take up more than the four months legally stipulated, allowing them to add accumulated annual leave to a maximum of six months in total. Another option we’re seeing is that new mothers are being allowed to slowly ease back in to work, by negotiating a flexible structure.”
If starting a family is part of your plan, it’s useful to assess your company’s level of support.
- If other fringe benefits are offered, such as motor vehicle allowance, business mobile phone and computer/laptop, “understand who will be responsible for insuring the business equipment”, warns Mampane. “Also, the motor vehicle allowance will impact on your personal taxes.”
When you move on from the job you’ve landed, repeat the process. Your employers, though they might go a long way to support their employees, don’t support their employees, may not be able to cater to your unique needs as much as you’d like them to.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.