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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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Respondents are extremely worried about the possible collapse of the economy

Respondents were staying indoors and only left their houses to get food or medicine, according to the COVID-19 behavioural and health perception survey results released by Statistics South Africa (Stats SA). The survey was conducted in the week of 13 to 26 April 2020. More than half (60,1%) of respondents were very concerned or extremely concerned about the impact of COVID-19 on their own health. Many of the respondents (93,2%) were very concerned or extremely concerned about the possible economic collapse of the country due to the COVID-19 epidemic, while 79,7% were concerned about the civil disorder that may result as a consequence of the COVID-19 virus. The report further shows that respo

Motswedi Emerging Manager Strategists March 2020 SA Listed Investments Survey

The month of March 2020 has seen the full impact of the COVID-19 on the markets, bottom of the market taking place on 19 March 2020. Once again reinforcing the wisdom that we are in this for the long term, be careful of knee jerk reactions in times of volatility. This month’s commentary is from Lima Mbeu Investment Managers. In our Global Multi-Asset (Global Balanced) section, we have introduced the “Global LMW Median” as an indicator and have credited Alexander Forbes Manager Watch. We are truly living through extraordinary times. Please stay safe and stay calm. Mark Davids Investment Strategy and Distribution Cell: 083 222 9913 Tel: (010)110 8768 Fax: 011 656 1165 Email: davidsm@motswedi.c

Many investors are asking how they should restructure their investments in the wake of the Covid-19

Here are some points to consider: This market crash is going to be like the kleptocracy of the Zuma regime. The full results will only come through much later. For example, the downgrading of South Africa’s debt only came months after he departed. Markets are already looking like hitting a W-curve with the markets dropping, then recovering and then dropping again to come back again later. Take a deep breath. Panic can lead to wrong decisions. Markets move in cycles and following collapses, such as now, we have seen they are likely to recover. The question is how deep will the depression be and for how long will it last. No one really knows. No investment makes a loss or a profit until you ac

Trauma redefined: Retiring in 2020

Amid the anxiety of a particularly potent virus forcing mankind indoors throughout the world, spare a thought for those amongst us who, after 35-40 years of hard work, planned or are forced to retire this year. The economic news in the run-up to this pandemic was hardly comforting but is now almost forgotten – international trade wars, the Middle East still on edge after all these years, the Brits calling it quits with Europe, an operationally and financially struggling electricity provider, government debt in the process of being downgraded to junk and then in the midst of it all actually being downgraded, the national airline on the brink of not flying, government policies creating uncerta

Retirement options during a volatile market

You’ve worked the last 40 years of your life only to reach retirement during a time when markets have dropped more than 20% since the start of the year. Those who now need to receive an income from their retirement savings are sitting with the dilemma of what type of annuity (a financial product that gives you an income in retirement) to choose and how to navigate through these unprecedented times. At retirement, according to the rules of a Pension Fund and Retirement Annuity Fund, you’re allowed to take up to a third in cash (subject to tax) and allocate the remaining portion of your retirement savings to provide you with an income. Currently, a Provident Fund allows you to access all of it

Unpacking investment-linked living annuities

No one generic pension fund product provider is better than another. They offer different solutions to different people. But research by Alexander Forbes shows that not enough research is actually done, particularly in the first 10 years, to establish the best solution. If you have sufficient capital on which to retire, you can use almost any retirement annuity on offer and preferably a combination of a living annuity and a guaranteed annuity. But, even if you retire with sufficient capital, and then make mistakes in investing your retirement capital, you are likely to become unstuck. The one thing all retirees and soon-to-be retired people need to know is how to manage their investments to

Digital adoption in the retirement industry during lockdown

Lockdown has had a major impact on how people live, work and communicate. While most people are focused on food security and when they will be going back to work, life will never be the same for most industries. The retirement fund industry is not one that people think about often, but a small player is making big waves to help the industry adopt technology and serve members remotely. Total lockdown might come to an end next week, but our movements will be restricted for quite some time to come. It is estimated that it can take months for the economy to return to normal and for most people how they work might change for ever. Only time will tell. For the retirement industry, this means that

Covid-19: A global reset with a generational impact.

Isaac Ramputa, Executive Director at RisCura, Glenn Silverman, CEO of GS Investments, Karl Leinberger, CIO at Coronation, Malungelo Zilimbola, CIO of Mazi Asset Management and Shane Watkins, CIO of All Weather Capital. The local and global economic outlook is bleak, yet the same may not be true for markets. Investment firm RisCura recently hosted a webinar with leading investment specialists in order to get their views on Covid-19 and its impact on markets, the economy and society. “The impact of Covid-19 will be with us for a long time, likely generations,” said keynote speaker Glenn Silverman, CEO of GS Investments and independent consultant to RisCura. “Unemployment will rise globally and

FSCA warns the public against fraudulent online activity

It has come to the attention of the FSCA that there is a rogue domain called www.fscaza.com, which fraudsters used to send a phishing email to one of our service providers with the aim of soliciting financial gains. This domain has also been redirected to our organisation’s legitimate domain (www.fsca.co.za) to mislead unsuspecting stakeholders into believing that it belongs to the FSCA. Please note that www.fscaza.com is not a legitimate FSCA domain. The Authority encourages you to remain vigilant and verify the authenticity of any communique you may receive from domains purporting to be the FSCA relating to financial transactions. If you are unsure of any communication you have received fr

Government’s R500 billion package to fight COVID-19 health and economic crises

Highlights President Cyril Ramaphosa announces a R500 billion fiscal package (10% of GDP) to support the local economy. The details of the fiscal stimulus package reveal that the actual stimulus is much smaller than the headline figure, at approximately R200 billion. Over a fifth of the fiscal stimulus package comes from budget reprioritisation within departments, which will likely not be spent due to the lockdown. The South African government approaches the World Bank, the International Monetary Fund, the BRICS New Development Bank and the African Development Bank to finance the fiscal stimulus package deficit. The government aims to apply a risk-adjusted approach to the return of economic

SA's COVID-19 related employment challenges and fears of retrenchment

What’s in the headlines? With the South African Reserve Bank (SARB) recently revealing that the COVID-19 pandemic could lead to over 370 000 job losses across the country, leading FinTech company, CompariSure, surveyed South Africans from all walks of life on their current employment challenges and fears of retrenchment. What does South Africa have to say? CompariSure’s data revealed that 68% of respondents feared retrenchment in the current environment and only 38% believe that “life will go back to normal” post-pandemic. In addition, when asked about the current state of their employer (including those self-employed), 48% indicated that their employer “was in trouble”, with only 19% indica

Retirement funds and Covid-19: payment of contributions and rules options

When employers or employees are financially distressed there are a number of options as regards making contributions towards retirement benefits. I have not set down all the options, just those that seem to have been more prevalently considered. The options available to you may also be suggested by what is already provided for in your fund’s rules. This article has a legal slant and fund boards should speak to their advisors about their options. Employers reading this article should also know that the options will depend not only on the rules of the fund but what the board of the fund may decide. Liability for contributions Contributions to funds are dealt with in section 13A of the Pension

Fresh obligations for Employers as “New Normal” commences after Lockdown

Once society begins “life as normal” following the COVID-19 lockdown, employers will need to ensure a safe working environment for employees, with not only hygiene but also physical, psychological and intellectual measures in place for an indefinite period, say Paresha Kala and Kate Powell, senior consultants from Health Management Solutions at Alexander Forbes. As we await government’s update on what the lockdown regulations will be after 30 April 2020, we begin to define what the “new normal” looks like – an ongoing process as we become accustomed to the benefits it may bring, such as reduced time spent in traffic as virtual meetings grow in popularity. In looking after our employees’ psyc

Prioritise your finances to also protect your ability to earn an income

Few could have predicted the impact the coronavirus is having on the world, and, while there are many uncertainties that we’re still grappling with, there is also a growing realisation of how important it is to protect what we have. Hopefully, for most of us, any current impact on our ability to earn an income is temporary. While the majority of Covid-19-related loss of income to date has been because of business interruption, it does put the focus on the importance of preparing for loss of income from illness or injury – even more so if such a loss is permanent. Loss of income can be devastating when you’re in your prime working years as you have so many more years of earning potential ahea

The Hidden Costs of Getting Divorced

Real-life love stories don’t always lead to the proverbial happily ever after. In fact, Stats SA found that four in ten couples get divorced before they reach their tenth wedding anniversary. It has been reported that divorces are on the increase, with more female (51%) plaintiffs prompting proceedings. A total of 55.6% of divorces have children under 18 involved. With children especially, a divorce can get complicated and – in general – even uncontested divorces can take a huge financial toll. Lee Hancox, Head: Channel and Segment Marketing at Sanlam, says “If you’re facing the prospect of a divorce, it can be a difficult, emotionally taxing time. Remember, you’re far more resilient than yo

Forget the gig economy, we need the delivery economy

A few months into the Coronavirus (COVID-19) crisis, and it feels like the global economy has hit a brick wall. Much of the world has entered into lockdown to break the chain of virus transmission. We know that such drastic action does work as eventually new cases begins to diminish. While these developments give hope, let us acknowledge the basic facts. Firstly, we know that this virus is extremely infectious. Secondly, the symptoms can be very severe and has been shown to have a high death rate and some patients require highly specialised medical care, while in others, it can be asymptomatic. Thirdly, we have no proven drugs for treatment, no vaccine and we are still a very long way off fr

Hedge Funds – Opportunity in uncertainty

Large price swings are continuing The recent economic downturn has had a substantial effect on economies and financial markets, highlighting the importance of a sound and robust investment strategy. Preparation for uncertainty offers investors breathing space to handle market shocks. Large price changes can occur when news is very different from what was expected or when there is a high amount of uncertainty. Currently, a lot of news is unexpected because these are unique circumstances, and nobody knows how things will turn out. Also, events are highly interrelated so the impact of any piece of news is far reaching. This means that large price swings will continue until there is more certain

Dividends for growth and income generation

Key takeaways from this article Companies that issue dividends can provide inherent fidelity to the financial state of the company while unhealthy companies are generally not in a position to provide dividends to their shareholders. Qualified dividends (the dividend paid by an institution to its ordinary shareholders after the deduction of tax) are taxed at rates lower than the ordinary income tax rate of 45%. In South Africa, dividends tax is 20%. Even during periods of recession, dividend stocks have historically shown growth. Over the past 93 years dividend stocks traded on the S&P 500 have provided investors with returns close to twice those of stocks without dividends. Kiru Padayachee,

COVID-19 Impact on Businesses : Survey Results

The results of a rapid response survey conducted by Stats SA during the lockdown was released today. Businesses were asked how the current crisis affected their operations in the two-week period from 30 March to 13 April 2020. 707 businesses in the formal sector responded to the survey, outlining the pandemic’s impact on turnover, trading, workforce, imports and exports, purchases, prices, and business survival. According to the report, five in six businesses surveyed experienced a drop in turnover over the reference period. 85,4% of businesses surveyed reported turnover below the normal range. Respondents in the construction, real estate and other business services, and transport industries

The dichotomy between what pension scheme members want and what they get

The one thing an investment linked living annuity (also known as a living annuity, or illas) does not do is give pensioners a secure income flow. Few pensioners are likely to be financially secure until death. The advent of Covid-19 and the junking of South Africa’s debt makes it far worse when share prices and dividend payments drop. Most living annuity pensioners had already received a serious body blow even before the virus and the downgrade of South Africa’s debt, with many already having high drawdowns. Despite this, 90% of South African pensioners want living annuities on which to retire, while at the same time research undertaken by Sanlam and Just SA finds that 87% of retirees want s

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