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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.


FSCA’s update on the Steinhoff Investigation

The Financial Sector Conduct Authority (FSCA) issued a notice to Steinhoff, last week during the parliamentary hearings, to provide the authority with the forensic report prepared by PricewaterhouseCoopers (PwC). The notice was issued in terms of the Financial Sector Regulations Act No. 9 of 2017 (FSR ACT). Following this notice, the authority met with the representatives of Steinhoff who have agreed, without waiving the confidentiality and privilege which inheres in the PwC forensic report, to furnish all relevant documents to enable the FSCA to investigate alleged transgressions of Sections 78, 80 and 81 of the Financial Markets Act No.19 of 2012 (FMA Act). Steinhoff has, in addition, conf

Get to grips with the benefits from your employer

Understanding company-provided death and disability cover ins and outs Insuring your ability to earn an income, and ensuring your loved ones are taken care of if something happens to you, is top priority for many of us. At a bare minimum, this usually entails life insurance and ‘insurance’ benefits such as disability or critical illness cover. Depending on your company package a lot of this may be covered through your employee benefits arrangement. But there are some key differences between taking out this cover in your personal capacity – and when it is provided as part of a group arrangement through your company. This is according to Elna van Wyk, Head of Underwriting and Disability Manage

Rising divorce rates: Make sure it doesn’t cost your savings

Statistics SA has recently revealed its latest data on divorce and marriages in SA, recording an increase in divorce orders between 2013 and 2017. In 2017 there were 25,390 completed divorce forms processed – indicating an increase of 0.3% from the 25,326 processed in 2016. The findings also show that four in ten divorces (44.6%) of those processed in 2017 came from marriages that did not reach their tenth wedding anniversary. Mlulami Nxele, legal advisor at Allan Gray, says that while getting divorced is a relatively straightforward process, the emotional and financial implications are often enormous. Because a marriage must be dissolved by a court, it can take a long time before the matter

Self-indexing: should index managers track their own proprietary indices?

The rise in popularity of index tracking strategies has delivered strong revenue growth for index providers over recent years. Effectively, index providers design indices for index managers to track, and charge a nominal licence fee for this service. The big three index providers, MSCI, S&P Dow Jones and FTSE Russell, have been exceptionally successful in increasing their dominance in the market with a combined market share of almost 80% currently, as strong brand recognition and economies of scale have made their business model successful. On the other hand of the equation are the index managers who pay the licence fees to track these indices. Often these fees can be a large burden for low-

Investments: It’s all going to the dogs

Investing in market underdogs is a winning investment strategy One of the first principles in investing is to “buy low and sell high”. A second principle is to avoid the risk of doing the exact opposite, namely “buying high and selling low”. While these two principles seem patently obvious, they can be challenging to implement, even for the most experienced investor. This is because of a fundamental vulnerability in the human psyche: the herd instinct. But, for disciplined and resilient investors, taking advantage of market mispricing to “buy low” by investing in “50-cent-in-the-rand” opportunities, is an investment strategy that offers excellent potential for long-term returns. At a market

Check your financial blind spots

We all know to check our blind spots while driving to help prevent accidents which are not in our direct line of sight. Blind spots also exist when it comes to our financial well-being. Like when you’re behind the wheel of a car, not identifying a potential financial blind spot can have an expensive and lasting effect on our finances. Gerard Visser, Financial Planning Consultant at Alexander Forbes Financial Planning Consultants, outlines some of the mistakes people make: 1. Live within your means Do not compare your life and what you need to be happy to someone else’s, especially when it comes to material objects. Live within your means and have a proper budget. Driving an expensive car is

Success with unclaimed benefits

In April 2018 Fairheads Benefit Services took over two unclaimed benefit funds from the Sygnia group and launched the Fairheads Unclaimed Benefit Preservation Pension Fund and the Fairheads Unclaimed Benefit Preservation Provident Fund. It was logical for us to take over the administration of these funds as we have a proven track record in tracing those who are unaware of the benefits that are due to them. Our intention is to use these capabilities to help alleviate the huge unclaimed benefits problem our country faces. Judy McKenzie, Team Leader at Fairheads Benefit Services, says: “Since inception of our two unclaimed benefit funds, we have made successful contact with and paid out 89 memb

Retirement fund default regulations

Introduction During 2017 the Minister of Finance issued the final retirement fund default regulations (commonly referred to as “Default Regulations”) made in terms of section 36 of the Pension Funds Act, 1956. These Default Regulations, published in Notice 863 of Government Gazette No. 41064, were the outcome of an extensive consultative process between Treasury and the FSCA (the first draft was published back in July 2015) and intend to improve the outcomes for members of retirement funds by ensuring that they get good value for their savings and retire comfortably. In this edition we will discuss these new default regulations in more detail. Default Regulations The final default regulation

FSCA warns the public against Total Capital Trading

The Financial Sector Conduct Authority (FSCA) warns the public to act with caution when dealing with Total Capital Trading (Pty) Ltd. Total Capital Trading (Pty) 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. It has been brought to the attention of the FSCA that Total Capital Trading (Pty) Ltd is claiming to render financial and intermediary services without being authorised to do so, and again claims to be associated to Zwelonke Holdings which is an authorised financial services provider. Zwelonke Holdings’ key individual Mr Clifton Mario Heradien confirmed that it is not li

Blockchain – One of the most disruptive technologies?

One of the disruptive technologies and one with perhaps the widest impact on a variety of businesses is undoubtedly Blockchain. Often confused and mistakenly linked solely to Bitcoin (Blockchain was developed as the transaction platform for Bitcoin), it’s in actual fact much, much more. Blockchain, in its simplest of terms, is a time-stamped series of immutable and incorruptible record of data managed by cluster of computers but not owned by any single entity. Here’s how it works: Two parties want to exchange information or execute a transaction of value. They record the transaction between them on the system. This transaction is then broadcast to a decentralised database that forms a public

The difference between medical scheme cover and health insurance

As financial intermediaries we are often asked why medical scheme cover is so expensive compared to health insurance. Three main factors influence this: Underwriting and Open Enrolment The legislation governing the medical scheme industry states that all registered medical schemes must accept any person who wishes to join the scheme (Open Enrolment) and that the scheme may not discriminate against the person in any way except in terms of income and family size. Therefore, a scheme cannot reject an application. The scheme must accept any person and can impose a general three month waiting period, a 12-month exclusion from cover for any existing medical condition and a Late Joiner Penalty (LJ

Private Equity trends rising to the surface in 2019

In such a rapidly evolving environment, it’s not always easy to forecast what the future holds, but there are certainly some clues as to what the private equity (PE) industry might expect in the coming year. From evolving skill sets to a rapidly changing investor base, there are a number of emerging trends on the cards for 2019. These insights, along with how the industry can better prepare for the shifting PE landscape of the future, were discussed in a panel discussion at the Southern African Venture Capital and Private Equity Association (SAVCA) Conference, recently held in Stellenbosch. Panel member and Managing Partner of Egon Zehnder, Xavier Leroy, says that of all the trends rising to

The risks and solutions to power outages

As power outages continue to affect South African households and business, we need to look at measures to prevent or reduce damage that could be caused by an interrupted power supply. Dipesh Radia, Executive: Actuarial and Underwriting at Alexander Forbes Insurance, addresses the following risks of power cuts: Fire – heating appliances left on when the power goes off, but not switched off again when the power comes on, are obvious fire hazards. “Simply switching off all heating appliances when the power goes off is the best precaution against fire,” says Radia. He continues, “Insurance will cover you for an unsupervised appliance that catches fire.” Electrical surge - damage can occur with m

Now is not the time to avoid investing

South Africa had its fair share of turbulence in 2018 – from higher deficits and worsening unemployment rates to challenges around land reform and a technical recession in quarter two. These challenges have resulted in investors opting to shy away from domestic markets, seeking investment opportunities outside the country. “While SA’s economic growth still faces some headwinds, we believe investors should be optimistic about domestic opportunities,” says Adriaan Pask, CIO at PSG Wealth. “Despite lacklustre growth and high unemployment data, the leading business cycle indicators from the South African Reserve Bank (SARB) have been on an upward trajectory for some time,” says Pask. “Greater ce

Delegated investment service puts retirement fund members first

When the Financial Sector Conduct Authority announced that it wants the number of standalone pension funds to shrink dramatically by March this year, it ushered in the industry’s biggest shift since the move from defined benefit to defined contribution funds in the late 1990s. The regulator’s move partly reflects that smaller funds are finding it difficult to comply with ever stricter regulatory and governance requirements, particularly since the ‘default’ regulations came into effect in March 2019. Trustees simply don’t have the governance bandwidth, for want of a better term. The move is also to try to reduce the burden of cost on the ultimate member, a conclusion predicated on the assumpt

Digitising Retirement & Financial Learning - The next level?

In a recent article, I discussed the way video has become the new print and how attention spans for most people but most notably in Millenials (also known as Gen Y: Born 1977 – 1995) and Gen Z (also known as iGen, or Centennials: Born after 1996) are on the decline. In our data driven society, people much rather prefer watching a 30 second video to reading an article with the same information in 2 minutes. The same can also be said for how people want to learn and be trained. Imagine for a moment trying to train a group of people on retirement and financial planning – perhaps not the most exciting of topics for them but an extremely necessary one. Imagine also herding them into a classroom t

Fraud, waste and abuse

According to the Association of Certified Fraud Examiners (ACFE) SA, healthcare fraud, waste and abuse syphon huge amounts of money from the South African economy each year. One expert puts the figure at R930 million per annum. FAnews spoke to Brian Watson, an Independent Healthcare Consultant for Genesis Medical Scheme and Discovery Health CEO, Dr Jonathan Broomberg about fraud, waste and abuse in the medical schemes industry. Offenders, provinces and offences In 2018, Discovery Health’s efforts to curb fraud, waste and abuse in the healthcare system resulted in a substantial R555 million recovered on behalf of client schemes. “The volume of cases investigated in the forensic unit continues

Outlook of the SA fundraising environment

Regardless of a challenging economic and political environment in South Africa last year, the outlook for 2019 remains positive, with strong indications of sustained confidence in the local private equity and venture capital industry. This is according to Craig Dreyer, the Chairman of the Southern African Venture Capital and Private Equity Association (SAVCA), who was speaking at the first ever joint Private Equity and Venture Capital in Southern Africa Conference, held in Stellenbosch at the end of February. “Due to a commodity downturn, political instability and currency devaluations, there has been a slowdown in growth in Sub-Saharan Africa, which has impacted the private equity and ventu

Looming “expat tax” is ultimately fair

On 1 March 2020 the amended section of the Income Tax Act concerning the foreign employment income exemption comes into effect. This so-called “expat tax” has caused concern among South Africans working abroad who currently pay no tax if they meet certain criteria. But, from next year, only R1 million of this income will be exempt from tax here. Such is the anxiety around this change that National Treasury held a workshop to discuss concerns on 6 March 2019, and there is concern that there is little understanding of the practical issues facing employers and employees. Treasury also indicated that they are not interested in a policy change and that the R1 million exemption will not be increas

Looking for ‘quality shares’ a good solution for very nervous South African investors

Trade wars, slowing global growth, power failures, nervousness ahead of elections, possible further rating downgrades and some spectacular price collapses in Johannesburg Stock Exchange (JSE) market darlings have led many South Africans to reduce investments in the local market or stop investing. But there is a way for investors to feel a lot more comfortable about achieving consumer price inflation beating returns by putting money to work on the JSE - by building a core portfolio of shares based on the concept of quality. What are the characteristics of quality shares? On the quantitative side, there are three principal areas that should receive attention – profitability, financial strength




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