STAFF TRUST FUND SCHEME: Mackers’ Employees Approach

By Ola Emmanuel

“Becoming wealthy is not a matter of how much you earn, who your parents are, or what you do, it is a matter of managing your money properly”. - Noel Whittaker

In today’s piece, I am going to adopt a different style of writing. I believe this will demystify the topic in such a way to spur every serious-minded group of people unto immediate action.
An employee of Mackers Holdings Limited was concerned about the poor financial dispositions of the company’s members of staff. While relatively few knew the about savings and were enjoying the benefits of investments, the better chunk of the members of staff were living care-freely. The employee in his concern went ahead to make a proposal. Further deliberations at the management level led to the memorandum below:

In view of the well-liked maxim that ‘failure to plan is a plan to fail’, there is need for every staff of Mackers to plan for his or her financial future. This shall be achieved by everyone setting part of his or her salary apart in order to meet the future commitments; thereby reducing the future’s uncertain financial issues to a definite degree of certainty. The following posers will explain this innovation better: (i) How many of Mackers’ staff has savings? (ii) Will Mackers’ pension plan be sufficient to meet your money requirements at retirement? (iii) What are the goals of every Mackers’ staff during retirement years? Are there enough preparations for this?

“In order to encourage a better financial discipline by ways of savings, a staff investment trust fund is hereby put in place. This initiative shall be known as “Mackers Staff Savings and Investment Trust Fund (MSSITF). The trust fund shall encourage staff to save part of their salaries to meet future financial commitment and obligation; and to help Mackers staff members to invest their money in a profitable investment portfolio that promises adequate returns.

“Please note that Mackers, as a company, is not involved – and we will not allow the company to participate if it wants to. We shall choose from among ourselves (staffs) to manage our money. We will hire experts from outside to assist us. Middle level and senior staff shall contribute N5,000 while junior staff shall put in N2,000 monthly.

“To avoid temptation, your monthly contribution shall be removed from your salary at source; and Mrs Grace Solomon has been asked to be the chairman of the board that comprise 6 other members. They shall manage the fund on our behalf; so you don’t need to panic.”
The memo above explains in clear term the concept of a Trust Fund Scheme.

What is a Trust Fund Scheme?
It is a unit trust fund whereby people who are bounded together with a common structure (friendship, employment, etc) decide to take advantage of their relationship to pool money together, on regular basis, for investment purposes. The pooled money is thus invested in diversified portfolio of securities to meet the investing goals of the people. The goals and objectives of the investing relationship are clearly spelt out in the rules and regulations guiding the relationship (prospectus).

The benefits of a trust fund scheme to a willing group of people cannot be over-emphasised. These benefits include the possibility of the people in the group to maximise their savings and investment earnings through hybrid of incomes and capital appreciation which will later be shared at the determined period according to the units or proportion of members’ contributions.
The management of a Trust Fund Scheme may be handled by more than one body – appointed Trustees (comprising of a number of members picked from the investment group) and investment advisors. The appointed trustees may hire an asset management company to handle the day-to-day administration of the fund and acts as investment advisor to the trust scheme.

Enjoy my Pen, and stay financially fit.