Young professionals not being spared as companies retrench

The tough economic environment in South Africa is reflected in claims for retrenchment from insurers‚ who are paying in billions of rand in policies for loss of income.

Liberty paid out R3 billion in claims for 2014‚ it said in a statement on Wednesday. Of all claims submitted by men and women under the age of 35‚ the majority‚ 43% and 53% respectively‚ were for Loss of Income Protection.

"We have seen a steady increase in retrenchment claims as the South African economy struggles to regain momentum‚" says Henk Meintjes‚ head of Risk Product Development at Liberty.

Highlighting the need for young employees to "save for a rainy day"‚ the insurer urged graduates to take financial advice to improve their budgeting – and not to spend all of their income on rent‚ running a household‚ or paying off loans and credit cards.

"With growing financial pressures the young adult has to consider their finances just as much as the average 45-year-old‚ if not more‚" Meintjes said. "It is a smart step to take towards being prepared for any eventuality‚ especially if you have a family that depends on you‚ and it will set you up for a lifetime of responsible decisions."