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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.


Why ownership and accountability matter

Who owns what? Why does it matter? Calls for broader participation in and ownership of the economy are increasing. It’s time for us to shift our attention from short-term return on financial capital and shareholder equity, to long-term return on human capital and societal equity. A fresh breeze is blowing through the corridors of society, where ordinary people have found their collective voice, and are using it to change the conversation. Gone are the days of subservient obedience and reliance on the few in the know to make decisions on behalf of the many. This is increasingly true of the millennial investor, who wants to know that her investment counts and makes a difference. Last year saw

“Nothing Fails Like Success” – Lessons for Company Board Members and Retirement Fund Trustees

Since December 2017, Steinhoff has been hogging the media for the wrong reasons. Investigations are currently in progress, it is therefore premature to make any definitive pronouncements. However, it does provoke a few questions. How did the executives, boards, CFOs and audit committees, auditors, coterie of asset managers and their research teams, consultants and big private investors get it wrong? It shows that it is not very difficult to fool most of us. Have we developed a “conspiracy of reverence” to these companies? Are they “holy cows”? Before we look at the lessons, what is good corporate governance? “Good governance starts with good legislation” Anne Maher, CEO of the Ireland’s Pens

Expert tips for women to keep financial goals on track

Numerous demands on your time and pockets mean that as a woman it’s easy to stray from the path to achieving your financial goals. But in anticipation of the upcoming International Women’s Day, Christelle Louw, an Advisory Partner at Citadel, offers some practical tips for avoiding common slip-ups and getting your own finances back on track. She cautions that despite the many accomplishments that South African women are achieving as leaders and in their careers, it’s all too easy to fall prey to the dire mistake of neglecting your personal finances. “It can be difficult to strike the right balance between caring for family and friends, meeting the demands of your career and maintaining a wat

Insurance and risk management equally important to prevent employee fraud losses

Employee fraud has risen sharply in recent years, and statistics show that instances of theft by employees are becoming increasingly severe. This according to Anton Meyer, Executive Head: Financial Lines at SHA, who explains that employee fraud impacts a significant number of South African companies, and has the potential to result in significant losses, driving a company into insolvency. Managing and insuring against the risk of corporate fraud has also become increasingly difficult for many companies. “There is simply no accurate way to anticipate which employees are most likely to commit fraud, or when it may happen. An employee’s level of employment is also no indication of the amount of

Who are the real losers?

The implosion of JSE-listed Steinhoff International Holdings NV (“Steinhoff”) has received a significant amount of attention since the spectacular collapse of its share price early in December 2017. While it’s generally agreed Steinhoff’s legal headwinds will take many years to settle, only time will tell whether shareholders will be able to recover any of the losses that they have suffered. The international flavour of Steinhoff’s operations will further complicate the legal wrangling in the years ahead. Jaco Pretorius, CEO of Ensimini Financial Services, says while the various investigations, in particular the PwC investigation, run their course, the absence of reliable information on what

Make Active Great Again

A reflection on the rise of factor-based strategies Many enthusiastic investors look forward to this time of year – be it with excitement or trepidation – so they can reflect on how their funds stacked up on performance-ranking tables over the prior year. The sterile obsession around 12 month performance notwithstanding, calendar years are neatly packaged time periods to look back on everything that went well, and everything that didn’t. Was my fund exposed to Steinhoff? Did I have enough Naspers? Was my portfolio hedged against the Rand? And ultimately… did I pick the right fund manager(s) to make those all-important calls and judiciously adjust my portfolio through the year to best take ad

Regulation 28 offshore limits to increase on the back of Budget 2018 announcement

A key announcement by Finance Minister, Malusi Gigaba last week included the increase in offshore allocations by institutional investors of 5%, meaning that institutional investors can now invest up to 30% offshore. However, institutional investors typically include retirement funds. Discovery Invest approached the Financial Services Board for clarity on how this would work practically in light of the Regulation 28 restrictions under the Pension Funds Act, which currently stipulate that retirement funds may not invest more than 25% offshore. Olano Makhubela, Deputy Executive Officer for Retirement Funds at the FSB confirmed that retirement funds would now be able to increase their offshore a

Investment Implications - 2018/19 Budget Review

Finance Minister Mr Malusi Gigaba started his address by referring to the budget as “tough but hopeful” and reading through the detail we agree. Prior to the budget, we noted that the focus would likely be on the revenue side but it is the expenditure side that really surprised the market. Government increased its revenue projection by R36 billion. Among others, this will be attained through increasing value added tax (VAT) from 14% to 15%, raising taxes on estates over R30 million to 25%, implementing only partial relief for bracket creep, increases in the fuel levy, sin taxes, and higher excise duties on luxury goods. There were no changes to income tax (besides the bracket creep), the cor

Old Mutual Corporate: Post Budget 2018 Commentary

Continuing the momentum created by a positive and well received State of the Nation Address, the Finance Minister delivered a well-balanced budget with a strong focus on fiscal consolidation and growth stimulation to avoid a further credit rating downgrade. From a retirement fund reform perspective, a great deal of clarity has been provided regarding future implementation, and the notion of greater inclusivity of the provision of retirement benefits remain important. We are encouraged by National Treasury’s ongoing initiative to promote retirement savings among South Africans in 2018. Regarding the annuitisation of provident funds and preservation, which formed part of the Tax Laws Amendment

Post-Budget 2018 Commentary

In light of the political turmoil of the past six months, we are delighted with the depth and foresight of the 2018 National Budget Review Framework. In the midst of state capture allegations, it is pleasing to note the quality of skills and level of commitment of staff within National Treasury. As expected, it is, as Minister Gigaba stated at the start of his budget speech, “a tough but hopeful budget". Even though the fiscal deficit will remain for some time, the measures that have been taken demonstrate the resolve and willingness of the Ramaphosa administration to reverse the decade of economic decay that preceded his election. All the ingredients to achieve the long-overdue return to su

Countries With the Worst Work-Life Balance

People in Turkey don't have a work-life balance, according to the Organisation for Economic Co-operation and Development (OECD). Mexicans aren't really in the balance either. The United States and the United Kingdom also perform pretty poorly, out of all 35 OECD member countries (plus Russia, Brazil and South Africa) covered in the Better Life Index for 2017. The most important aspect for a healthy work-life balance is the amount of time people spend (not) at work. The authors of the Better Life Index note that "evidence suggests that long work hours may impair personal health, jeopardise safety and increase stress." And the Dutch are apparently the people who enjoy the best work-life bal

Budget 2018: how it affects you

Aligning the tax structure with the growth objective The outstanding feature of Budget 2018 is the decision to raise the VAT rate by 1%, which nets the fiscus an additional R22.9 billion in 2018/19. Together with another increase in the fuel levy and excise duty increases in excess of inflation it ensures the dominant share of the additional R36 billion collected in taxes in 2018/19 will come from indirect taxes. VAT is widely considered a regressive tax and a draconian measure, since low income earners spend a larger portion of their income on consumption. That said, given zero ratings and exclusions, the tax is arguably mildly regressive or even progressive. Note, too, the decision was par

Sanlam Employee Benefits: National Budget Speech Commentary 2018

Finance Minister Malusi Gigaba’s maiden budget speech was keenly anticipated by South Africans wanting clarity on how he proposes to plug the gaping budget deficit. In his own words “This is a tough, but hopeful budget”. New tax measures aim to raise an additional R36 billion in 2018/19, mainly through a higher VAT rate and below-inflation adjustments to personal income tax brackets. These measures, along with public spending cuts, will contribute to reducing the budget deficit and funding fee-free higher education and training for poor and working-class students. The following proposals are relevant to the employee benefits industry: 1. Retirement reform Improving the treatment of retiremen

No wealth tax but taxing the wealthy

In his 2018 Budget Speech, Finance Minister Malusi Gigaba has found a balance between raising taxes on the wealthy, broadening the tax base and providing a safety net for the poor. The rand appreciated somewhat and bond yields traded lower soon after the Minister started to speak, signalling firm approval from the markets. Citadel Chief Economist and Advisory Partner Maarten Ackerman states that overall the budget was very balanced, acting largely to stabilise state finances and keep credit ratings agencies at bay. “The figures overall were fairly conservative. Economic growth was estimated at 1.5% in 2018, and projected to rise to 2.1% in 2020. He also prioritised the need to address the gr

Budget Review 2018

The 2018 Budget arrives at a moment of opportunity for South Africa. A renewed sense of optimism has provided a much-needed boost to confidence and investment. The economic outlook has improved. And government has expressed a new resolve to strengthen policy coordination. Yet this positive turn of events should not blind us to the enormous economic and fiscal challenges facing our country. Economic growth is far too low to reduce alarmingly high unemployment and inequality. Revenue collection, on which government depends to fund social and economic spending programmes, will fall short of projections by R48.2 billion in 2017/18. The finances of several state owned companies are in a precariou

A reform - minded budget to put South Africa back on track

It is not surprising that the International Budget Partnership ranked South Africa first, along with New Zealand, on the 2017 Open Budget Index. The National Treasury has, once again, demonstrated its worth and strength through the 2018 National Budget Review. Although there are notable revenue shortfalls and taxes had to be increased, the budget framework has put South Africa back on the path of fiscal prudence, which will be positively viewed by ratings agencies. Importantly, there is a renewed focus on introducing economic reforms, which, if implemented, could lift gross domestic product (GDP) growth going forward. Tax hikes Value-added tax (VAT) has increased by one percentage point to 1

Good budget shows willingness to take difficult decisions – and hopefully keep Moody’s on hold

By raising South Africa’s VAT rate from 14% to 15%, the South African government indicated a willingness to take difficult (and unpopular) decisions in order to stabilise the fiscus. Coupled with the recent change in the President, this Budget should be enough to keep Moody’s on hold when they release their South Africa sovereign review on March 22nd. If a good cabinet is appointed in the coming week, it may even be enough for Moody’s also to move the outlook to stable from negative. However, there are two concerns – firstly, that the debt-to-GDP profile does not stabilise for five years, and secondly, the public sector wage settlement that is still being negotiated. Overall, Finance Mini

The focus is shifting towards fewer products

Times have changed, and the principles of diversion have changed. In today's knowledge-based economy old business models do not work. With this in mind, do life insurers need to rethink product strategies? We spoke to Hayley Taylor, Head of Underwriting and Ryan Chegwidden, Head: Product & Technical at Hollard Life about the life insurance sector. Out with the old, in with the new Product strategies, according to Chegwidden, have already started changing. “There is a clear slowing down in developing new products and changing existing products, with far few new products brought to market than before. The focus is shifting towards fewer products with fewer options so that product ranges are si

FSB withdraws FAIS License of JVN Asset Management (Pty) Ltd

The Registrar of Financial Services Providers (“the Registrar”) instructed an inspection into the affairs of JVN Asset Management (Pty) Ltd (“JVN”) FSP 45923. The FSB obtained a search and seizure warrant that was executed on 20 June 2017 at JVN’s offices in Johannesburg and an investigation proceeded. The inspection has revealed that JVN and Messrs Levi Nkosi and David Lamb have contravened a number of laws, regulations and licensing conditions. The Registrar reported the matter to the Asset Forfeiture Unit (“the AFU”), a division of the National Prosecuting Authority. The AFU successfully applied for preservation orders with reference to the funds in the bank accounts of JVN, JVN Harvest

Batseta encourages trustees to participate in vital infrastructure development

Given South Africa’s enormous infrastructure backlog and urgent need for additional funding, the Batseta Council of Retirement Funds recently partnered with the Gauteng Department of Human Settlements to convene its first infrastructure development workshop for pension fund trustees. Anne-Marie D’Alton, CEO of Batseta, notes that the workshop aimed to demonstrate to trustees the benefits of investments in infrastructure for both accelerating economic growth and transformation, and better managing portfolios’ risk profiles through diversification. “Infrastructure development is central to building an efficient and robust economy that in turn impacts the everyday lives of pension fund members.




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