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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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Old Mutual Survey highlights urgent need to minimise financial stress

With the cost of living on the rise, it’s not surprising that South Africans continue to suffer from money-related stress, as indicated by the 2018 Old Mutual Savings and Investment Monitor (OMSIM). It’s also not surprising that the less you earn, the greater your stress. Low earners already struggle to cover day-to-day expenses and are not able to absorb higher prices or unexpected financial expenses. John Manyike, Head of Financial Education at Old Mutual, points out that low earners (households earning less than R6000 per month) are now spending about 79% of their income on consumption, the highest since the survey started. But he adds that several other factors also contribute to financi

11 Important considerations when choosing an umbrella fund

WHAT TO LOOK OUT FOR Governance: A well-run fund is critical to protect members. Flexibility and choice: Each employer is different, and the umbrella fund needs the ability to meet your specific needs. Investment strategy: Enabling members to earn returns well above inflation for most of their working life is crucial to achieving a reasonable replacement ratio. Risk benefits: Can your current structure be replicated, or can a similar structure be put in place without prejudicing certain fund members? Preservation options: Since preservation is one of the most important ways to ensure that an employee’s retirement savings are sufficient, employers have to carefully consider the options availa

Second-hand smoke and the rights of non-smokers

Yes, smoking does kill. Despite the alternative facts on the internet or comparisons of how it fares against other drugs, medical evidence remains: smoking cigarettes causes one-third of all cancer deaths. This is according to recent research by the American Cancer Society which found that smoking cigarettes does not only increase the risk for lung cancer, but it can directly cause 12 types of cancers. But while smokers choose to exercise their habit, this Anti-tobacco month, the spotlight needs to focus on the rights of non-smokers, who run the risk of developing health issues from passive smoking. According to Dr Marion Morkel, Chief Medical Advisor at Sanlam, while we are all susceptible

Google's Profit Takes Three Major Hits in 15 Months

Google’s parent company, Alphabet, delivered convincing second quarter results on Monday, beating analyst expectations across the board. Just days after being hit by a $5-billion antitrust fine by the European Commission, the company reported $32.7 billion in revenue for the three months ending June 30, up 26 percent from last year’s second quarter. Alphabet’s profitability took a severe hit in the second quarter, but investors have little to worry about, because the drop in net income can be entirely traced back to the impact of the antitrust fine Google has just been hit with. After accounting for the fine, net profit for the second quarter amounted to $3.2 billion, compared to $8.3 bil

Are the proposed new conditions for exemption in terms of section 7B of the PFA ‘fit for purpose’?

Personal notes and observations by Kobus Hanekom subsequent to workshops arranged by the Pension Lawyers Association in Cape Town, Durban and Sandton lead by Rosemary Hunter and himself. The FSCA’s draft guidance notice on section 7B exemptions has caused a great deal of controversy and debate in the retirement industry. A part of the debate relates to some of the specific proposals made. The more significant debate however revolves around those issues that were not mentioned and discussed. These include the role and function of the sponsor in all commercial funds. As South African employers migrate their employees to umbrella funds, the typical role they played in establishing and supportin

Is TCF serving its purpose?

The purpose of regulatory reform is to establish a set of rules and guidelines within an industry that will determine how business is done within that industry. Treating Customers Fairly (TCF) is a key document that regulates the industry. If insurers and brokers adhere to these outcomes, the client will receive the best outcomes from interactions with insurers or brokers. Are all companies coping with the objectives set out by TCF? We spoke to Odette de Beer, Manager: Group Customer Conduct at Hollard, to find out the company's views on TCF and its impact on the industry. An effective referee Many insurers and brokers asked if the industry really needed TCF; however, it was implemented. Is

Withdrawal of the Financial Planning Institute (FPI) as a recognised examination body

The FSCA confirms that the recognition of the Financial Planning Institute (FPI) as an examination body will be withdrawn. The process of transferring all examination data, records and archives over from the FPI to the FSCA will be completed by November 2018. The FPI will continue to provide the following support function until all examination records have been transferred over to the FSCA, and all exam records have been reconciled: 1) Attending to all queries in respect of examinations that were conducted by the FPI up to 12 June 2018; 2) Assistance in obtaining duplicate FPI examination certificates. The FSCA will communicate to the industry once this transfer of examination records has be

FSCA Commissioner appoints Divisional Executives

The Financial Sector Conduct Authority (FSCA) is pleased to announce that some of the key executive positions have been filled. In terms of section (62) (1)(a) of the Financial Sector Regulation Act (FSRA), Mr. Abel Moffat Sithole, as the Commissioner of the FSCA has appointed the following individuals on 2 year contracts as operational Divisional Executives: Mrs. Caroline da Silva, Divisional Executives: Regulatory Policy Mr. Jurgen Boyd, Divisional Executives: Market Integrity Mr. Marius du Toit, Divisional Executives: Specialist Support Mr. Olano Makhubela, Divisional Executives: Retirement Funds. The following vacant Divisional Executives positions have been advertised: Conduct of Busine

Demystifying Alternatives

The Batseta Council of Retirement Funds of South Africa hosts conferences that address the concerns of retirement fund members and offer consolidated advice to trustees and principal officers. At this year’s July Winter Conference in Durban, speakers addressed the environment of ‘lower returns for longer’ that investment managers and retirement fund trustees are currently faced with. A popular and recurring solution to the common problems faced was to look further at what the rest of the investments universe has to offer; to seek out alternative investment options. Mabatho Seeiso, an independent trustee and spokesperson, facilitated discussions on Alternatives: private equity (buy-outs and v

The Price Tag Attached to Data Breaches

A recent poll showed that of major U.S. internet companies, Twitter is the least trusted when it comes to keeping data secure. Of course, no company has a fail-safe method of data protection and the consequences of a leak can be severe. As well as the negative effect on public image and reputation, the infographic below shows the average monetary cost of a data breach. As reported by IBM Security and the Ponemon Institute, the costs are the highest in the U.S. with the average incident coming with a price tag of $7.91 million. Although one may assume that such leaks are always caused by criminal activity, 25 percent of the cases examined were actually due to human error. Article published

FSCA warns the public against Muzi Khumalo and Liezel Johnson

The Financial Sector Conduct Authority (FSCA) warns the public to act with caution when dealing with Muzi Khumalo and or Liezel Johnson. According to the information received, this individual purports to be a financial services provider. The FSCA confirms that he 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 FSCA received information that Muzi Khumalo who uses the alias: Liezel and Liesl Johnson on Facebook, refers customers to the GT247.COM website as his own website. GT247 (Pty) Ltd, trading as GT247.COM, with company registration number 2017/190488/07, is a subsidiary and

FSCA warns the public against Mrs Sadia Akbar

The Financial Sector Conduct Authority (FSCA) warns the public to act with caution when dealing with Sadia Akbar. According to the information received, Mrs Akbar purports to be an employee of an entity called Financial Service Authority. The FSCA confirms that Financial Service Authority is not authorised in terms of the Financial Advisory and Intermediary Services Act, 2002 (“FAIS Act”), to render any financial advice and intermediary services. Mrs Akbar also purports that Financial Service Authority has its head office at the same office address as that of FSCA and that they advise members of the general public on payments made to them via cheque, which may be couriered to members of the

EU Hits Google With Record Antitrust Fine Over Android

The European Commission’s record-breaking €4.34 billion ($5.1b) fine against Google is by no means the first time that the EU’s watchdog has taken action against an American tech company. In fact, Google itself got a taste of EU antitrust regulation as recently as last year. In June 2017, the company was fined €2.42 billion ($2.7b) for abusing its dominance as a search engine to give an illegal advantage to Google Shopping over other comparison shopping services. As the following chart illustrates, other tech giant’s have felt the wrath of the European Commission as well. Microsoft alone has been fined four times over the past two decades including three times for allegedly ignoring previ

Your adult child still lives at home? Financial tips for parents

While many parents either dread or look forward to the day when their kids reach adulthood and leave home, globally more young adults are postponing the move out of their parents’ house and some are even moving back home after finishing tertiary studies. This may present a financial conundrum for parents who are housing adult children, some well into their 30s. André Wentzel, Solutions Manager at Sanlam Personal Finance says this trend places mounting financial pressure on parents, at a time when they should be boosting their retirement savings. According to Statistics SA, 32.2% of South African households have more than one generation living under one roof and in the United States more youn

Towards a sustainable retirement

Make sure that you and your financial planner are executing the same financial game plan. The relationship that you have with your financial planner is comparable to the one that exists between a professional sportsperson and his or her coach. It takes the form of an unbiased and objective collaboration through which you and your financial planner continuously evaluate and implement the strategies that will deliver your desired long term financial outcomes. Mark MacSymon, CERTIFIED FINANCIAL PLANNER® professional and proud winner of the 2017 Financial Planning Institute’s Financial Planner of the Year award, says that it helps to think of your financial planner as a ‘coach’ who develops

BlackRock, the World’s Largest Asset Manager, is Exploring Cryptocurrencies

Six months after its chief executive lambasted bitcoin as an “index of money laundering,” BlackRock — the world’s largest exchange-traded fund (ETF) provider — has set up a working group to explore how to profit from the burgeoning cryptocurrency ecosystem. The Financial News reports that the $6.3 trillion asset manager has begun discussing whether to invest in bitcoin futures and is also exploring other ways to gain exposure to cryptocurrencies and blockchain technology. The task force will also examine how its competitors are investing in the cryptocurrency industry and whether those ventures present a threat to BlackRock’s market share. As CCN reported, a number of ETF providers have soug

Millennial Misconceptions

There’s a common misconception that the so-called ‘avo-toast’ generation is irresponsible with money and unconcerned about future outcomes. Sanlam’s 2018 Benchmark Survey shows this simply isn’t the case: for the majority of millennials, saving for big long-term goals is top of mind but can seem unfeasible. Gen Y (born between 1981 and 1998: currently aged 20-37) spans a vast age bracket across various life phases. With major expenses like moving out, lobola, weddings, buying a car - or even a house – and thus more to budget and save for, the short- to medium- goals inevitably trump the long-term goals. So how does a job-juggling, frequently family-supporting, debt-saddled generation of savv

Advice for women seeking divorce in a customary context

Customary marriages come with their own unique set of characteristics and the laws governing customary marriage and divorce/separation may be of interest – particularly to women. Last year, the landmark Ramuhovhi ruling catalysed a proposed amendment this year to the Recognition of Customary Marriages Act (RCMA). In essence, a polygamous father passed away, leaving his share of the estate to all his wives and children. But only one wife was married in community of property; the rest were married by customary law, which caused contention over the inheritance of the +R10-million estate. This highlighted the Act’s discrimination against women in customary marriages. The amendment changes this:

Sanlam Investments Market review: June 2018

The American economy strained under the revived discussions on trading tariffs for US aluminium and steel imports. Neighbouring countries Canada and Mexico responded in turn, with Canada issuing retaliatory tariffs and Mexico threatening to increase tariffs on agricultural produce. Trump also suggested that China, the EU and UK will face protectionist action, further reducing investor confidence in global markets. The Dow Jones Index suffered three weeks of losses, but spiked in the month’s last three days mainly due to a strong performance by Nike. The European economy has largely stabilised following the conclusion of the immigration deal that relieves pressure from countries such as Italy

SA added 56 000 jobs in the first quarter of 2018

The total number of jobs reported in the first quarter showed an increase of 56 000 from the previous quarter, bringing the total number of persons employed in the formal non-agricultural sector to 9 838 000. According to the figures from the Quarterly Employment Statistics (QES) Survey, formal sector jobs rose year-on-year by 74 000 in the first quarter of 2018 when compared with the same period of 2017. Job growth surged in the community services industry, which added 67 000 jobs. Construction and manufacturing industries added 12 000 and 9 000 jobs respectively. Moderate gains were also reported in the business services industry with a slight increase of 4 000 jobs in the first quarter. J

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