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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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Sanlam appoints new Board members in line with proactive approach to enhance governance, transformat

The Sanlam Board has announced the appointments of new Board members in line with the Group’s proactive approach to enhance governance, transformation and the continued strengthening of the leadership at board, executive and management levels. These appointments are also aimed at supporting the success of the broader Group and supporting its growth ambitions. Messrs Andrew Birrell, Elias Masilela and Kobus Möller have been appointed as independent non-executive directors to the boards of directors (Boards) of Sanlam Limited and Sanlam Life Insurance Limited. In addition, Ms Jeanett Modise, the Group’s Chief Executive for Human Resources, has been appointed as an executive director to the res

Retirement savings decisions cannot be based on cost comparisons alone

From September this year all commercially sponsored umbrella funds must include a charge table disclosing fees for investment management, administration, advice and other charges. The new Retirement Savings Cost (RSC) Disclosure Standard aims to make it easier for employers to compare apples with apples and choose the best umbrella fund for their employees’ needs. However, as with most new legislation, teething problems are to be expected as financial services providers (FSPs) come to terms with the new regulation. This is according to Michelle Acton, Principal Consultant at Old Mutual Corporate Consultants. Until now, comparing umbrella fund costs has been difficult because fees can be cha

Rethink retirement; spend sustainably

In the face of rising living costs and high levels of household debt, the notion of retiring comfortably seems beyond reach for many South Africans. However, retirement income specialist Just maintains that soon-to-be retirees can facilitate a smoother transition towards a sustainable lifestyle in retirement by rethinking their essential spending. Essential expenses are the cost of physical survival, covering the basic costs of living; accommodation, food and clothing, utilities, medical, transport and insurance. Latest figures from Statistics SA reveal that a household’s essential spending makes up between 65 and 75% of total monthly budget across all socio-economic categories, with only no

Consider your 2020 Medical Aid Options

Its once again the time of year when you need to consider your medical scheme plan choice for the forthcoming year. Those with many thousands accumulated in their medical savings account (MSA) may be wondering how best to deal with this money. In addition, they may be wondering if they can draw this money out of the Medical Scheme. Unfortunately, the Medical Schemes Act does not allow for this. One needs to think carefully and consider all possible alternatives when choosing your option for the coming year. Most medical schemes have options that include a MSA. This is a mechanism to assist members in making provision for their day-to-day medical expenses, those which typically take place out

Brokers aren’t prepared for 1 September

The Association for Savings and Investment South Africa’s (ASISA) Retirement Savings Cost (RSC) Disclosure began on 1 March but becomes compulsory on 1 September for all ASISA members with commercial umbrella funds. The new legislation standardises the disclosure of costs to clients incurred in an umbrella fund, expressed as a percentage of the investment amount. Arguably, brokers are not prepared for the shift, which calls for careful analytical ability to compare and interpret results. Shakeel Singh, CEO at Sanlam Umbrella Solutions, says, “Previously, costs were disclosed in different ways which led to some opaqueness regarding the true cost to client. Now there’s standardised disclosur

ILPA Principles 3.0: Embracing the emerging trends of ESG and impact investing

In June this year the Institutional Limited Partners Association (ILPA) published the latest edition of its principles under the title “ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners.” The new principles take a much-needed step forward both in advancing environmental, social and governance policies (ESG) practices in the private equity industry and providing strong ESG governance and transparency. The principles were first published in September 2009 to encourage dialogue between Limited Partners (LPs) and General Partners (GPs) of private equity funds. Following feedback from industry practitioners, ILPA released an updat

Tough times for investors, but there is reason for hope

Delivering exceptional investment performance in current market conditions is no simple task, given that uncertainty and unemployment remain critically high whilst economic growth, liquidity and interest rates remain stubbornly low. In this difficult environment, shares that were priced perfectly for uninterrupted growth have fallen hard to reality, and companies that appeared cheap a year ago are even cheaper today. Numerous businesses listed on the Johannesburg Stock Exchange (JSE) have been left debt-strapped, with earnings growth weak or absent, and dwindling share prices. Management teams have very little room to manoeuvre and, within the space of the past few months, a few have even ex

Keep your options open with retrenchment over retirement

Many employers who are retrenching staff for operational reasons differentiate between employees who are over age 55 and under, but there are a number of considerations that should be taken into account to benefit the employee, says Jenny Gordon, head of Retail Legal at Alexander Forbes. We often see that if the member is over 55, the termination of service is determined by the employer to be early retirement whereas for employees under age 55, it is retrenchment. In some situations, an employee who is being retired might receive additional benefits such as a medical scheme subsidy so it is beneficial to become a retired employee. But if this is not the case, being retrenched keeps more opti

Transferring Generational Wealth – the options and decisions

At some stage of every investor’s successful financial journey, the question of transferring wealth arises. This simply means the transfer of wealth to your heirs or beneficiaries on your death by utilising different financial strategies such as, amongst others, wills, estate planning and/or trusts in a tax-efficient way. As the testator, one of the biggest challenges and obstacles you will face when drafting your will is firstly, deciding who to transfer your wealth to and secondly what is the best way to transfer it. The first decision is very personal, and each individual will have a different situation. Most people tend to bequeath their wealth to a spouse, children or grandchildren, but

The trust is dead – long live the trust!

Increasing focus on trusts by revenue authorities, both locally and offshore, has created the perception that trusts are being targeted – especially from a tax perspective – and that they are going to become obsolete. The question now is should trusts still be used in estate planning, or has their star faded? According to Citadel Fiduciary (Pty) Ltd Managing Director Hilary Dudley, trusts still have an important role to play within estate planning if they are formed for the right reasons, offering benefits such as asset protection and continuity. “That said, it has become much more expensive to hold assets within a trust, and there are less tax planning opportunities now than during the 1970

FSCA issues warning to the public against African Wealth Shares

The Financial Sector Conduct Authority (FSCA) would like to warn the public not to deal with an entity called African Wealth Shares. It has found that African Wealth Shares 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 was informed that African Wealth Share has been offering investment opportunities to customers with the promise of a 50% or more return on investment within 30 days. African Wealth Shares’ website alleges that they are affiliated with Wealth Associate Financial Advisors, an authorised financial services provider (FSP 45922). Wealth Associate Financial Advis

The power of collaboration to find financial well-being solutions that are relevant for employers an

Alexander Forbes has through a series of thought leadership interventions started to change the narrative on retirements and retrenchments in South Africa to a much broader discussion on how collaboration can result in solutions that both employers and their workers need. This is important because in a world where a rigid regulatory framework often dominates product design thinking, there is a serious risk of losing sight of the most critical issue: How to create solutions that address the critical pain points for clients? By turning the lens of analysis around to the perspective of clients, we have quickly appreciated how easily the retirement industry could be missing the mark. To demonstr

Allan Gray launches free “Saving for Education” Series

To help parents, parents-to-be and caregivers to school-going children on their investment journey, Allan Gray has launched a free, email-based investor education series focusing on saving and budgeting for the rising costs of education. “Our research indicates that many investors intuitively understand that it is a good idea to save towards the escalating costs of education, yet the figures are so intimidating that they often land up giving up before having started,” says Ray Mhere, regional manager at Allan Gray and a parent grappling with this challenge. He adds that the Allan Gray Saving for Education Series will help parents budget and invest for their children with confidence. “It wil

FSCA warns the public against Ashcroft Cohen Strategic Capital

The Financial Sector Conduct Authority (FSCA) would like to warn the public not to deal with an entity called Ashcroft Cohen Strategic Capital. Ashcroft Cohen Strategic Capital 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 was informed that Ashcroft Cohen Strategic Capital has been offering investments to customers. Ashcroft Cohen Strategic Capital is based in China and there is no record of application by this entity to be registered as an authorised financial services provider (FSP) or any existing license issued by the Authority. Therefore, it is FSCA’s view that Ash

How the workplace can support parents of special needs children

Caring for a child with special needs can be a full-time job, requiring parents to become an expert on the condition and how to handle their child’s unique difficulties and behaviours. Between this, they usually have to work their real job to earn an income, and care for the rest of the family. Head of Alexander Forbes Health Management Solutions Myrna Sachs, said there was a need for employers to consider the unique requirements of parents living with this reality, and to assist where possible. Zanele Shabalala, Office Manager at Alexander Forbes Health in Johannesburg, has become adept at balancing life with her quadriplegic son Banzi. The nine-year-old has lissencephaly, a rare, gene-link

Divorce and Death – the impact of Section 2B on your will

Introduction Not many people are aware of the statutory disqualification as set out in Section 2B of the Wills Act No. 7 of 1953, which states that if a testator dies within three months of becoming divorced, and that person executed a will before such divorce, the will shall be implemented as if the previous spouse had died before the date of divorce, unless it is clear from the will that the testator intended to benefit their ex-spouse despite the divorce. In this edition we look at the impact of this section. The Wills Act No. 7 of 1953 Section 2B of the Wills Act No. 7 of 1953 (“the Act”) reads as follows: “2B. Effect of divorce or annulment of marriage on will.—If any person dies with

How technology is changing the wealth management industry

One of the most significant trends in the wealth management industry in recent years has been increasing adoption of technology as both a facilitator and a driver of growth. In particular, the emergence of automated investment services that make use of artificial intelligence (AI) has given rise to the provision of automated or “robotic” advice (robo-advisors) helping to democratise the industry and provide access to a far larger proportion of the population than before. Two streams Essentially two streams have formed in the approach to using technology – pure robo-advice businesses which are technology platforms offering a simpler form of access to wealth management and the more traditional

Exchange traded funds: a simple & cost-effective way to access the stock market

Exchange traded funds, along with other passive investments, are becoming more popular with South African investors. First launched in SA in 2000, they’ve gained traction in recent years as investors become more cost conscious as a result of muted market returns over the past few years. The local market ETFs still make up a much larger portion of the funds invested in markets such as the US than they do in SA however, meaning local investors could be missing out on a cost-effective way to gain overall market exposure. The argument still exists that developed markets such as the US are more efficient when it comes to pricing, i.e. that the prices of the shares have taken into account all fac

Hindsight is 20/20 when it comes to offshore investing

The local stock market has delivered disappointing returns over the past five years, barely beating inflation. It has been a painful period for equity investors, not only relative to the great returns we have seen in the past, but also relative to the returns local investors could have generated by investing offshore. However, as Hannes van Zyl, principal investment consultant at Alexander Forbes says, “hindsight is always 20/20”. According to Van Zyl, the ultimate return when investing in assets denominated in a foreign currency depends on two sources: The return on the offshore account The return on the currency For example, if a South African invests in an S&P 500 index tracking portfolio

Is South Africa ready for what the NHI will cost?

Since the Department of Health released the National Health Insurance (NHI) Bill on 8 August, a lot of its weaknesses have been exposed. This was an issue that was raised at a recent briefing that was held by the Institute of Race Relations (IRR). The size of the beast One of the undeniable challenges of the NHI is that it will come with a heavy price tag. How heavy do you ask? Well, that is hard to tell and can only be projected using educated guesses and projections. Dr Anthea Jeffery, Head of Policy Research at the IRR, pointed out at the briefing that when former Minister of Health Dr Aaron Motsoaledi discussed the NHI Bill in 2010 at the release of the NHI White Paper, he said that the

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