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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.


Digital Security – The threats are bigger than you think

In today’s modern environment, great reliance is placed on technology in the way we do our record keeping, administration, banking, financial transactions, communication, etc. What we don’t pay much attention to, often to our own risk and detriment, is how secure we really are as opposed to how secure we think we are. In the February 2019 Symantec ISTR (Internet Security Threat Report), the incidents and variety of threats are made strikingly clear and business owners, fund administrators and people in general would do well in familiarising themselves with the numerous methodologies and platforms used by cyber-criminals to get a hold of you. According to the Symantec Report, there are severa

Could quitting your cappuccino double your retirement income?

Contribute more to your retirement savings, end up with a much better pension, and save on your tax bill. Let’s say you’re 28 years old, earning R30 000 a month and you have R70 000 in retirement savings. Now let’s look at the difference between contributing 5% and 10% of your monthly salary to your retirement fund from here on. Ideally you should retire with a pension equal to 75% of your last salary. Working on your current income of R30 000 that means a pension of R22 500 a month. If you only save 5% a month, you’ll wind up with a pension of R7 879 a month – far less than you’ll need. But if you save 10% per month, you’ll have a pension of R14 594. While still not ideal, it’s a much b

Don’t fall into the trap of complacency

2018 was a year where a few new trends started to emerge within the financial services industry. These trends would exert such an influence on the industry that many businesses were forced to relook at business and distribution models to establish whether they were still appropriate. These changes will continue to occur in 2019. However, insurers and brokers now know what they are dealing with and can anticipate some of the effects of this change. According to a report by global auditing firm Deloitte, there are a few mega trends which will still exert a lot of pressure on some insurers in key markets. The regulatory bulldozer The Deloitte report points out that insurance regulators globally

What you need to know about Retirement Savings Cost (RSC) Disclosure Standards

The Association of Savings and Investment in South Africa (ASISA) has developed a standardised savings cost disclosure methodology to assist potential and existing participating employers and/or boards of trustees when comparing quotations/costs from different umbrella fund providers that are members of ASISA. From 1 March 2019, employers will find it much easier to select the most cost effective umbrella fund solution for their employees, when the new ASISA Retirement Savings Cost (RSC) Disclosure Standard comes into effect. It must however be noted that, ASISA has allowed a grace period of 6 months, in which its members need to comply. This means that by 1 September 2019 all ASISA members

Financial Services comes last in trust in latest global barometer

The financial services industry was once again the least trusted sector in the annual Edelman Trust Barometer, which has been measuring trust in business, NGOs, government and the media for the last 19 years. The report is published by Edelman Intelligence, a global insight and analytics consultancy. The 2019 report, which looks at last year, was released on the 12th of February. It shows financial services only achieving a two-point increase over 2017 which, after five years of a steady increase in trust post the financial crisis, shows that trust is stalling. In South Africa, trust declined a further 6 points over 2017. The Barometer tracks the views of both the general population and the

Where Smartphone Adoption Is Still Poised for Growth

When the mobile industry is showing off the latest advancements in smartphone technology at the Mobile World Congress in Barcelona this week, foldable screens, sophisticated camera systems and of course 5G will doubtlessly steal most of the headlines. And yet, as smartphone penetration is nearing saturation levels in many developed countries, it’s easy to forget that billions of people don’t have a smartphone at all, let alone one that folds into a tablet or has five camera lenses. According to a report published by GSMA, the global industry group representing mobile operators and other industry players, worldwide smartphone adoption stood at just 60 percent of all mobile connections in 2018

Don’t let your emotions control your financial investments

The last quarter of 2018 can be described as the worst period that investors have experienced since the global meltdown of the financial markets in 2008/9. When these moments of market correction occur, astute investors sit tight while others panic and make irrational decisions. In the chart below we can see that as the markets are rising, our emotions are that of relief, thrill and euphoria. However, when the markets start to fall, we get anxious, experiencing emotions such as denial, fear, depression, panic and then we capitulate and move our money into “safe assets”, such as cash. Then, as the markets swing back, we are caught in a low growth fund at what should be the point of highest po

Pension Fund ordered to relook at Death Benefit Payment

A pension fund should have exercised better discretion when allocating a more than R1-million death benefit to the deceased’s 75-year old mother who already received a State grant, to the total exclusion of his former life partner, the Pension Funds Adjudicator has ruled. Muvhango Lukhaimane ordered Absa Pension Fund (first respondent) to re-exercise its discretion in terms of section 37C of the Pension Funds Act and consider the request of the complainant, JT Damoense, to be allocated a share of the death benefit. The complainant was the former life partner of LB Mantjiu who passed away on 4 March 2017. The deceased was a member of the first respondent, administered by Absa Consultants and

Living Annuities Post 1 March 2019

I write this article with less than 10 days to go before the law requires that every South African retirement fund must make available a trustee-endorsed annuity strategy for its retiring members. Yet there is great uncertainty in the retirement funds industry how this will play out … During November 2018, the FSCA issued a draft conduct standard pertaining to all living annuities used in terms of such trustee-endorsed annuity strategies. Comments were requested by 14 January 2019, and now we all await the next steps. Key principles that the FSCA wishes to enforce for living annuity strategies include: Suitable for the average member who does not have the expertise to make choices. Ensure gr

Are South Africans are reasonably well covered in case of illness / death

Service magazine sat down with the CEO of Sanlam Group Risk, Michele Jennings, to find out how South Africans and their employers can ensure that everyone is covered to their satisfaction. In general, do you think South Africans are reasonably well covered in case of illness/death? Although funeral cover has achieved remarkable market penetration in the South African market, the relatively low levels of life, disability and critical illness cover have resulted in an insurance gap which ASISA quantified at about R29 trillion at the end of 2015. This means that in the event of one of these life changing events, many South African families are left in a predicament where they cannot afford to c

Unpacking the budget 2019

Eskom has been granted a R69bn bailout package – however there is widespread concern around exactly how this bail out will be used – and what, if any, measures will be put in place to ensure that the funds do not go to waste into what has become known as the “black hole of funding”. While Eskom and widespread cost cutting was the primary focus of Tito Mboweni’s budget speech, there are also some interesting points raised from a financial planning perspective. The budget is a first indication of some of the tax proposals that Treasury intends on introducing. Lack of incentives to save is disappointing Disappointingly, this budget has not highlighted any significant attempts to further encoura

2019 Budget – South Africans urged to consider long-term view

Finance Minister Tito Mboweni today said, “We are masters of our own destiny”, as he outlined a number of fiscal prudence measures aimed at assisting SA’s economic recovery. For the South African consumer there is a mix of good and bad news. The bad news is that all South Africans with income above the slightly increased tax threshold will be paying more tax – implying less disposable income - as no inflationary adjustments were made to the tax brackets. There were also no upward adjustments of medical expense tax credits or deductions such as retirement contributions. The minister has put a damper to sundowners, with an apology, by increasing sin taxes on alcohol and on other substances whi

Mboweni delivers sober budget weighed down by Eskom

Finance Minister Tito Mboweni delivered some very hard messages in his maiden Budget Speech today. None of it came as a surprise. However, as the ANC has shied away from facing any of these issues over the last decade, the real surprise lay in their willingness to do so just months before a national election. Deficit worsens as Eskom is included While it was widely expected that a significant allowance would need to be made for Eskom, the view was that government would take over a significant portion of the debt. Contrary to expectations, National Treasury have taken this through normal expenditure, thus adding roughly 0.4% to the main and consolidated budget deficits in each of the next t

2019 Budget Review - Structural reforms outweigh decimal points deteriorations in the figures

Finance Minister Tito Mboweni’s maiden Budget speech is a structural reform budget, which aims to reduce the immediate fiscal and economic risks posed by Eskom’s and other State Owned Enterprises’ (SOEs) unsustainable balance sheets and operational models. Without a doubt, the fiscal numbers show a marginal deterioration when compared with the 2018 Medium Term Budget Policy Statement (MTBPS) and slightly more so if we compare with the 2018 Budget Review. The consolidated budget deficit for FY2018/19 slips to 4.2% of GDP from the 2018 MTBPS’s forecast of 3.6%, rising to 4.5% of GDP in FY2019/20 before moderating to 4.0% by FY2021/22. The debt-to-GDP ratio now stabilises at 60% of GDP in FY202

Key financial planning take outs from Budget Speech 2019

While Eskom and widespread cost cutting was the primary focus of Tito Mboweni’s budget speech, there are also some interesting points raised from a financial planning perspective. Denver Keswell, Senior Legal Advisor at Nedgroup Investments says it is disappointing that this budget has not highlighted any significant attempts to encourage savings. “Disappointingly, there is no mention of any increases to the limits on tax-free investments or incentives to promote retirement fund savings, which seems mismatched to the president’s approach to growth and savings. Another interesting observation is the absence of any notable attempts to further introduce wealth taxes,” he says. Keswell also caut

Fasten your seatbelts for a bumpy ride

Since 2010 there has been a predictable narrative associated with the Budget Speech. We are living in tough economic times; the Budget is a fine balancing act of scarce resources and the public needs to tighten their belts. Over the years, this narrative was reinforced through the assistance of a number of key tax increases in order to increase revenue. However, since Cyril Ramaphosa was elected the President of South Africa, there has been an air of positivity that this could be a year of change. FAnews spoke to Isaah Mhlanga – Executive Chief Economist at Alexander Forbes Investments – and Rowan Burger – Head of Strategy at Momentum Investments – to find out what you can expect from this y

A very low percentage of people in our country can afford to retire with appropriate cover

Many people within South Africa live from day to day with little planning for the future – this, of course, is not entirely the fault of the people as our economy continues to struggle. However, the economy shouldn’t be allowed to force its people out of dignity or a good future. In order to find out more, we sat down with Shakeel Singh, CEO of Sanlam Umbrella Solutions. Please tell us more about the Sanlam Umbrella Fund? Umbrella funds are retirement funds where unrelated employers participate to benefit from economies of scale. The structure enables employers to offer employees packaged retirement savings and insurance. What would you say is the biggest concern with regards to South Africa

Is our retirement fund monies safe with this rampant corruption?

All the commissions (Zondo, Nugent, and Mokgoro etc.) that have been unfolding at a dizzying pace coupled with our amazingly courageous journalists have exposed in graphic detail the extent of theft, fraud and corruption that has and is taking place in the public sector (and one can assume in the private sector as well.) How have we become so rotten? The Agrizzi revelations indicate that the corruption began well before the Zuma era, and stretches back to the 90’s.It seems that it flourished without the blessing of government or did it turn a blind eye? Zuma clearly legitimated it as he tried to steal the crown jewels in a major way with the help of his friends. Guptas were major players how

Cryptocurrency regulation essential for everyone

Regulating cryptocurrencies is the next logical step as the asset class gains popularity and consumer protections become necessary. I recall some years ago in the UK seeing people tap their bank cards at coffee shops to pay – that was quite mind-blowing at the time. Today, I do the same to buy some plugs for my office. The world is different in how we are able to operate, and digital currency is changing the game even more and will soon become the norm. For some, it already is. With a recent Luno survey quoting a staggering 74% of South African respondents saying they’d like the option to pay for goods with cryptocurrency, the days of an entirely unregulated system are numbered. There will,

Why financial wellness can no longer be an afterthought

Financial wellness: It’s an HR buzzword. But with a number of players involved — from the C-suite to benefits managers to brokers and employees — there often is confusion regarding the best kind of program, the best way to implement it and how to get employees engaged. That’s leading to a lot of discussion — but few concrete solutions. “There are competing priorities, and not everyone is talking with one another,” says Denise Winston, CEO of Money Starts Here, a California-based financial education company. “There’s a lot of noise in this space, and there are so many demographics that we’re dealing with. It can be so confusing.” Employee Benefit News spoke with Winston on how employers can c




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