Most people with defined contribution pensions are experiencing anxious times as the vagaries of the stock market play havoc with their retirement funds. Gone are the days when one could retire on a guaranteed pension based on your end salary. This changed when most companies moved from defined benefit to defined contribution pension schemes a decade ago. With a defined contribution pension scheme, you carry the investment risk of your retirement funds yourself.

Some fund managers now offer you the opportunity to take control of your retirement funds through investment vehicles like Sanlam's Direct Equity Option. This option is ideal for investors who want equity exposure via a customised portfolio of shares and other securities. It provides an excellent opportunity for capital growth. You can invest discretionary or retirement capital lump sums directly in a portfolio of securities.

Investments in shares have potential for good returns. Most of the top 40 shares listed on the JSE have outperformed inflation over the long term. Over the past 10 years to 30 June, 2002, the CPI has averaged at 7.6% pa while the All Share Index produced an average return of 12% pa. In addition, the after tax returns from the top 40 listed shares over the longterm have outperformed the longterm returns from bonds and cash.

In contrast with equity unit trusts where investment decisions are made by the Investment manager and investments are pooled for all unit holders, the Direct Equity Option provides you with the ability to select and manage the securities in your portfolio. Whether you choose to make your own investment decisions or provide a mandate to an expert at a stockbroker like Sanlam Private Investments to make these decisions for you, this option enables you to tailor your equity portfolio to your particular risk profile, so you can expose your capital to shares that you feel have good growth potential.

To comply with pension fund regulations, at least 25% of your capital should be invested in prudential unit trusts or cash if you invest in the Direct Equity Option via Preservation Funds or a Retirement Annuity, and at least 20% of your capital should be invested in unit trusts or cash to provide for income payments if you are investing via a Life Annuity.