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<\/a><\/p>\nSimilarly, in its Benefits Barometer 2016, Alexander Forbes posed the following question: If a financial crisis is one of the contributors to poor preservation, why aren\u2019t we doing more to make saving for an emergency a focus and even an automatic process for our employees?<\/em><\/p>\n The key issue addressed through an emergency savings habit is that if a financial crisis occurs, the employee can deal with it without destabilising any long-term savings strategies.<\/p>\n It is reported that in 2016 only 10% of people who earned between R20,000 and R40,000 a month would be able to fund an unexpected expense of R10,000 from their savings, which implies that their short-term savings were insufficient or non-existent.<\/p>\n For those earning less than R20,000 a month, the situation was worse, Alexander Forbes said.<\/p>\n In 2017, the figure went up to 15% for those in the higher earnings bracket, so the situation appears to have improved a little but still requires intervention, it said.<\/p>\n Alexander Forbes points to an emergency savings regime as a potential solution. The idea is to take a portion of a member\u2019s pension fund contribution, and place it into an emergency savings vehicle.<\/p>\n “The idea behind such a solution is to leverage the power of compulsory long-term savings (retirement saving) to help employees meet short- or medium-term needs such as emergencies or other savings goals. This leaves employees with a sense of immediate value, as they can experience the benefits of their savings throughout their lives,” Alexander Forbes said.<\/p>\n As an example, it said that for employees who were contributing 14% of their salaries to an employer-sponsored fund, could reduce the\u00a0 contributions to 10%, and allocating 4% towards the emergency vehicle.<\/p>\n