Retrenchment Protector Means Even Greater Peace Of Mind For SA Workers
Key industry players from economists, politicians to the media all seem to be calling for jobs to be created in South Africa to help ensure that we deliver on our economic potential as what the international investment community would term, an “emerging market”.
Nicholas van der Nest, Divisional Director of Risk Product Innovation at Liberty says, “The focus on job creation has to some extent, taken the attention away from the number of jobs that have been lost in South Africa over the past few years. If we imagine the working population in South Africa as a bucket of water, it would be as important to try to prevent leaks at the bottom of the bucket thus preventing job losses as it would to fill up the bucket to the top with additional water. Essentially, preventing job losses is just as important as creating jobs.
“Most people find it hard to ask themselves questions surrounding retrenchment; however one must always be prepared for the worst case scenario. Be prepared for the inevitable by making sure you have a contingency plan in place should you lose your job. Ask yourself the following,” says van der Nest.
The effects of retrenchment on you
Irrespective of your life-stage, retrenchment can be financially crippling. In 2015 15.9% of young achievers claimed for income protection due to retrenchment, this is according to the 2015 Liberty Claim Statistics report. If you are young, it could leave you with no income to meet important financial commitments, such as car and bond repayments. If older, finding new employment after being retrenched might be much more difficult and a loss of income for any sustained period might inhibit your ability to retire at the intended retirement age, or retire at the standard of living that one has become accustomed to.
While the financial implications are fairly obvious, consumers often underestimate the emotional and psychological effects of a retrenchment. Loss of confidence, self-doubt, anxiety, embarrassment, anger, failure and betrayal are just a few of the feelings that those who have been retrenched are likely to experience.
Protection against retrenchment
How then, can you protect yourself against such debilitating financial and emotional effects? The answer is to identify this as a key risk, and as part of your financial planning process present ways in which it can be mitigated. While employers may provide other insurance benefits to their employees, retrenchment protection is not normally included because of the direct influence that the employer has over the likelihood of retrenchment occurring. Further, insurers have traditionally also not made comprehensive retrenchment protection available as part of their benefit offering. The result is that retrenchment is normally a residual risk in even the most comprehensively covered clients’ insurance portfolios.