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As a central knowledge portal to the retirement and related industries, EBnet publishes a range of daily articles submitted by a range of industry organisations, experts and contributors. Readers can also comment on and contribute to articles.

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Rating retribution and political plotting: key risks into year-end

20 November 2017: During his 2017 Medium Term Budget Policy Statement (MTBPS), Finance Minister Malusi Gigaba, announced figures that surprised even the most bearish of forecasters. Although some fiscal slippage was widely expected, it was the frank transparency with which he delivered his speech that sent the market into panic. There were few positives for him to hide behind. A tax shortfall of R50.8bn for the 2017/18 fiscal year would translate into a budget deficit of 4.3% of GDP, a 1.2 percentage point slippage on the figures announced in Pravin Gordhan’s last budget speech in February. With limited room to cut expenditure and little talk of additional revenue measures, for now funding t

Pensions World Latest Edition available on EBnet (OCT-DEC 2017)

In this edition... Our current concepts of retirement and employee benefits are under fire Beware! The FSB can replace the board of your pension fund! What difference does a quarter of a percent interest rate change make? Information analysis and the future of investing What do foreigners see that local investors don’t? Download PDF Publication - Click Image Below

China: A permanent revolution

To invest in an economy of over 1.3 billion people, a GDP of US$21 trillion and an all-powerful, all-seeing Communist government, you need to look at things a little differently. China is a unique equity market with divergent features such as an immature investment climate; strong government presence across strategically important industries; high levels of domestic retail participation; hot money flows in both directions and frequent shifts in sentiment and volatility. Combined, these factors lead to frequent market dislocations These events present challenges, but also create opportunities. The result is an extremely fertile environment for prospective equity market returns over the long t

Alexander Forbes launches a new innovative business, Alexander Forbes Empower

Alexander Forbes launches a new innovative business, Alexander Forbes Empower with a mission to empower customers to achieve better outcomes through developing a lifelong relationship with education and learning Strategic partnership with Degreed to offer a seamless on-line integrated learning portal and experience Sandton, 9 November 2017 – Alexander Forbes has launched a new innovative business called Alexander Forbes Empower with a mission to empower customers to achieve better outcomes, through developing a lifelong relationship with education and learning. In partnership with Degreed, a San Francisco, US based organisation, Alexander Forbes introduces a new on-line learning portal that

The significant impact of poor lifestyle and stress on the workplace

2017 Old Mutual Corporate Disability Monitor reveals a rise in poor lifestyle and stress induced diseases problems. The dawn of the digital revolution is shaping the way we work and live, driving innovation but also taking a toll on our health, particularly in the workplace. “While this modern world of work is opening up amazing possibilities, it has also brought a new set of challenges and health risks,” says Clement Chinaka, MD of Old Mutual Corporate. “Living in an always-on culture, we have become physically disconnected from each other and emotionally disconnected from ourselves. We’re less aware of our own physical and emotional needs or just too busy to pay them any attention.” Chinak

Africa Beat – News flow from the rest of the African continent

ECONOMIC UPDATE Namibia - Weak credit extension growth The Private sector credit extension (PSCE) growth moderated in September to 5.2% y-o-y from 5.9% y-o-y in August According to the Bank of Namibia, this moderated PSCE growth was driven by weaker demand for credit by the corporate sector Total credit extended to the corporate sector increased by 3.9% y-o-y in September, down from a 6.0% y-o-y increase in August In contrast, growth in credit extended to households remained steady at 6.4% y-o-y in September, unchanged from August Source: NKC Mauritius - Inflation remains unchanged in October The Consumer Price Index (CPI) remained at 3.5% y-o-y in October, which is the same reading as in th

Prescribed assets: by hook or by crook

Can Gigaba halt the plan? Does he want to? Whisper the thought, hoping perhaps in vain that finance minister Malusi Gigaba isn’t already contemplating it, that he does have a means to evade the jam of unaffordable government guarantees colliding with underfunded state-owned enterprises (SOEs). By hook or by crook, Gigaba must find a way. Introduction of prescribed assets will be by crook. Be ready to resist. From his perspective, the route of prescribed assets will be easier than hooking the Public Investment Corp (PIC) into loading up on stock in badly run SOEs. It won’t cause consternation among members of the Government Employees Pension Fund (GEPF), the PIC’s largest client, who’ve been

Populism and economic reform - Are we listening?

The rise of global populism and its impact on the world economy is an undeniable reality. What is happening in the sociopolitical landscape that businesses operate in? Does it matter, and what is the corporate sector’s role in a world that is changing before our very eyes, asks Clement Chinaka. Around the world, from the streets of Brazil to the city squares of Europe, from campuses in South Africa to voting booths in the United Kingdom, there is a growing feeling that the voice of the common man is not being heard. Populist uprisings are a global talking point, and for good reason – they concern issues that have a ripple effect around the world. It’s a subject that is ripe for dissection an

Demystifying Trusts

We are often asked about trusts, what their purpose is and how they function. A trust is essentially a contract between the Founder and the Trustees who undertake to manage the trust assets for the benefit of the beneficiaries. These assets do not belong to the beneficiaries and therefore are not susceptible to the financial risks of the beneficiaries in their personal capacities. The trust assets are consequently protected against, for example, the beneficiaries’ private creditors, their spouses (in case of divorce) and, to some extent, against their personal tax liabilities. Importantly, too, a trust creates a platform where wealth may be managed by the trustees by employing their collecti

Global discontent calls for a more equitable society

08 November 2017: While globalisation has raised levels of prosperity, the distribution of this new wealth remains largely unequal. A result of this mounting imbalance in wealth and power has been a growing frustration that the voices of ordinary citizens are not being heard, opening the door for populist political and economic rhetoric that promises social reform. Clement Chinaka, MD of Old Mutual Corporate, addressing last night’s 2017 Old Mutual Corporate Wisdom Forum, which this year addressed the topical theme of “Populism and Economic Reform”, said that it is quite clear from the widespread rise in populism that something is not working on a global level and that the masses are restles

Where did you think 80% of living annuitants & spouses are going to end up?

Derek Smorenburg CEO & Founder of SAIFAA is inviting all Independent Financial Advisors to consider attending the next set of Living, Life & Hybrid Annuity “Crisis” Forums where they will consider what “New and Disruptive” Solutions are being offered by Allan Gray, Analytics, Investec, JustSA, Marriott and Old Mutual Wealth starting on in Bellville on Monday 13th November, then in Umhlanga on Monday 20th and finally in Sandton on Tuesday 22nd November. The awkward reality is that the majority of the “at least 80%” of the current 500 000 Living Annuitants and their Spouses will run out of their Living Annuity Retirement Capital and then be faced with the difficult choices, assuming they have

Cash is king! Or is it?

Investors often tell us they are very concerned about the current economic, market, political and socio-economic environment in South Africa and the rest of the world. At times like these, being fearful of what the economy and markets will do is natural and should be addressed, so that you do not make poor investment choices, driven by the need to act. This can only be achieved when you have a properly documented plan, stipulating what your investment strategy is. Your reaction may be to only invest in cash in uncertain times, but cash is not cautious. Rather, it is very conservative. By only investing in cash – be it in a fixed deposit, money market fund or cash under your mattress – you ar

Africa Beat – News flow from the rest of the African continent

AFRICAN MARKET UPDATE The table below is a reflection of the performance of various African countries’ indices and some benchmark indices in US$ and local currency terms to 31 October 2017 ECONOMIC UPDATE Kenya - Price pressures decrease further in October The consumer price index (CPI) rate has dropped to the lowest level since May 2016 which was 5.0% y-o-y, CPI decreased from 7.1% y-o-y in September to 5.7% y-o-y in October The primary driver of the disinflation was the food and non-alcoholic beverages sub-index falling from 11.5% y-o-y in September to 8.5% y-o-y in October The majority of other major sub-indices saw marginal increases in October, including utilities & energy (+3.6% y-o-y)

FSB urged to act against fund for failing to provide information

The conduct of a pension fund, its chairperson and its administrator have been forwarded to the Financial Services Board (FSB) by the Pension Funds Adjudicator for remedial action after they repeatedly failed to provide requested information. Muvhango Lukhaimane wants the FSB to appreciate “the gravity of the problem posed by the conduct” of Municipal Employees Pension Fund and Akani Retirement Fund Administrators (Pty) Ltd, the first and second respondents respectively. The complainant OF Hlungwane who was employed by Ba-Phalaborwa Local Municipality was dissatisfied with the computation of his withdrawal benefit. He submitted that when he joined the first respondent, the rule on terminatio

FSB warns the public against Family Assist Cover

The Financial Services Board (FSB) warns the public to act with caution when dealing with Family Assist Cover, an entity purporting to be registered as a financial services provider, and its agents. Family Assist Cover Ltd is not authorised in terms of the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act), to render any financial advice and intermediary services. The FSB has received information that Family Assist Cover is using the logo and FSP number of KGA Life Limited, FSP 15980, to sell policies, stating that they are underwritten by KGA Life Limited. KGA Life Limited does not and has not underwritten any policies from Family Assist Cover. The FSB has also received infor

FSB warns the public against Mr Thapelo Mathibe of “Under the Radar Investments”

The Financial Services Board (FSB) would like to warn the public to act with caution when dealing with Thapelo Mathibe of “Under the Radar Investments”. The entity is not authorised in terms of the Financial Advisory and Intermediary Services Act, 2002 (“FAIS Act”), to render any financial advice and intermediary services. The FSB received information that Thapelo Mathibe resides in Ga-Rankuwa, he provides information that his company teaches people how to trade on the stock market and also trades on their behalf. He does not pay people their returns. He also promises people that his company is registered with the Financial Services Board (FSB), and he is busy moving into new offices. It is

Make sure your employees are covered against critical illness

Tailored group cover offers remedy against increasing prevalence of cancer and cardiovascular illnesses Statistically, one in four South Africans will be affected by cancer or will have someone close to them diagnosed. For a company of 100 employees, that’s 25 valued employees who could face such trauma. Apart from the financial burden of dealing with a critical illness like cancer – the out-of-pocket medical costs, unforeseen non-medical expenses like in-home carers and additional childcare – can wreak havoc on an employee and their loved ones. For an employer this means possible loss of productivity, absenteeism and the potential loss of a valued employee. According to Michele Jennings, C

Humans vs robots: Who has the edge?

Modern investing merges human insight with robo efficiency, causing some to argue that the role of the human advisor is dwindling. But human judgement still has a vital role to play in active and passive investment strategies. There are myriad different approaches to investing in various asset classes, be it locally or offshore. Potential investors can choose offerings with passive asset allocation techniques or active asset management styles, or even a combination of the two. Active focus On the one end of the scale lies fundamental active management. Here human judgement plays a large role in interpreting all publically available information about an investment. It could be qualitative (su

FSB fines James George Witheridge Gubb R100 000 for contravening the Financial Markets Act

The Enforcement Committee of the Financial Services Board on 23 October 2017 imposed an administrative penalty of R100 000 (One hundred thousand rands) on Mr James George Witheridge Gubb (Mr Gubb) for contravening the prohibited trading practices provisions of the Financial Markets Act, No 19 of 2012 (the Act). The Directorate of Market Abuse (DMA) had referred the case against Mr Gubb to the Enforcement Committee after investigations revealed that he had on 31 March 2017 contravened section 80(1)(a) of the FMA in that he traded with himself in Oakbay Resources and Energy Limited (Oakbay) shares which resulted in no change in the beneficial ownership of the shares. These transactions created

An ideal time to assess, review and rethink your retirement savings plan

In October, the focus was firmly on retirement and, as a theme, it draws our attention to the need to plan and save for the day your clients retire. I think people have heard enough preaching about the fact that they are not saving enough. For me, it is more about empowering people to make conscious and positive decisions about their future. It is about maintaining independence as a retiree and having the money and accumulating the resources to pursue goals and aspirations in their later years. In fact, clients’ perceptions of retirement have changed significantly in the last decade or so. As a life stage, retirement doesn’t have to be a full-stop but rather the start of another exciting cha

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