Provident and Pension Funds
Secure Your Employee’s Future with Provident and Pension Funds
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Retirement Savings Benefits
Employers can choose between a pension or a provident fund, as different fund structures to provide their employees with a savings benefit to help secure their retirement income
There are five investment portfolios that retirement fund members can choose from.
Aggressive portfolio: This is appropriate for members in their twenties who have a long-term investment strategy with a lot of time in the market before retirement age. They typically have 20 years or more to weather the market’s ups and downs and achieve maximum returns. This risk profile has more exposure to global and local shares, typically between 55% to 75%, with target returns of CPI (inflation) +5% over the long term but may fall short of this target over the short to medium term of three to five years.
Moderate Aggressive Portfolio: This portfolio is appropriate for members in their thirties with a long-term investment strategy with 20 years in the market to make up for potential losses and maximise returns before retiring. Moderately aggressive portfolios are often called balanced portfolios because the assets are mainly invested in fixed-income securities such as bonds and company shares.
Moderate Portfolio: This portfolio is appropriate for members in their forties with a fifteen-year time horizon in the market before retiring. Moderate portfolios have less exposure to company shares, between 27.5% and 37.5%. Investment returns are likely to fluctuate less than the aggressive risk profile, and even though returns may be negative over periods of up to a year, negative returns for extended periods will occur less frequently with less exposure to shares than the aggressive risk profile.
Conservative Portfolio: This portfolio is appropriate for members in their late forties or who have just turned fifty with five years to ten years before retiring. There is no time to make up for market losses and the risk profile is conservative. This is a time when members need to preserve their portfolios before retiring. The risk profile has no exposure to global or local shares and is invested only in money market instruments.
Default option: This option is designed for members who do not wish to exercise a choice and prefer the investment manager to invest the portfolio according to its discretion. A minimum of 30% is invested in local asset classes aligned with the Lesotho Pension Funds Act.
Aggressive portfolio: This is appropriate for members in their twenties who have a long-term investment strategy with a lot of time in the market before retirement age. They typically have 20 years or more to weather the market’s ups and downs and achieve maximum returns. This risk profile has more exposure to global and local shares, typically between 55% to 75%, with target returns of CPI (inflation) +5% over the long term but may fall short of this target over the short to medium term of three to five years.
Moderate Aggressive Portfolio: This portfolio is appropriate for members in their thirties with a long-term investment strategy with 20 years in the market to make up for potential losses and maximise returns before retiring. Moderately aggressive portfolios are often called balanced portfolios because the assets are mainly invested in fixed-income securities such as bonds and company shares.
Moderate Portfolio: This portfolio is appropriate for members in their forties with a fifteen-year time horizon in the market before retiring. Moderate portfolios have less exposure to company shares, between 27.5% and 37.5%. Investment returns are likely to fluctuate less than the aggressive risk profile, and even though returns may be negative over periods of up to a year, negative returns for extended periods will occur less frequently with less exposure to shares than the aggressive risk profile.
Conservative Portfolio: This portfolio is appropriate for members in their late forties or who have just turned fifty with five years to ten years before retiring. There is no time to make up for market losses and the risk profile is conservative. This is a time when members need to preserve their portfolios before retiring. The risk profile has no exposure to global or local shares and is invested only in money market instruments.
Default option: This option is designed for members who do not wish to exercise a choice and prefer the investment manager to invest the portfolio according to its discretion. A minimum of 30% is invested in local asset classes aligned with the Lesotho Pension Funds Act.
In summary, provident and pension funds are crucial for employees as they provide a secure and reliable income stream during retirement, offer financial protection in times of adversity, leverage employer contributions, provide tax advantages, and foster long-term financial planning. Employers who offer these benefits demonstrate their commitment to their employees` financial well-being and help them achieve a more secure and comfortable future.
What Our Customers Are Saying
MGC Mining
NTHETHE KOTELE - Provident Fund Management Committee Chairperson
Continuous Improvement is what I admire the most about Alliance Employee Benefits, and is by far its biggest strong point. Its ability to solve problems will and shall forever be what makes it income, or in this case keeps and gives it more clients.
World Vision Lesotho
Lieketseng Makoko, People & Culture Associate Director
The Employee Benefits team is always available to provide technical advice and guidance as and when it is required; Responsive with regular feedback on our submissions and is able to meet turnaround times for Terminal Benefits Claims. We are proud to have invested employee’s proceeds through a locally registered Administrator like Alliance
Additional Resources
Beneficiary Nomination Form
Employer Application Form
Group Funeral Registration Form
Know Your Customer Form