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Investment Indicators - 18 June 2018 |
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“To live is the rarest thing in the world. Most people exist, that is all.”
- Oscar Wilde |
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Distributed to 52,335 subscribers.
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| Rates Review |
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1. Secured Investment Rates |
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Please note that (G) indicates a Guaranteed and (L) a Linked product. In order to understand the difference between guaranteed and linked rates,
kindly click here for an explanation. |
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Company |
This Week |
Last Week |
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1Life (L) |
7.370% |
7.210% |
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2 |
Clientéle Life (L) |
7.270% |
7.220% |
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3 |
Absa (L) |
7.186% |
7.100% |
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Company |
This Week |
Last Week |
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Discovery (G) |
7.527% |
7.344% |
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2 |
1Life (L) |
7.370% |
7.210% |
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2 |
Clientéle Life (L) |
7.370% |
7.320% |
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3 |
Assupol (G) |
7.280% |
7.280% |
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2. Money Market Funds |
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Please bear in mind that our figures, though based on the actual quotations that you also use, are for information purposes only,
and can never replace the official quotation from the product house. In terms of the guarantees, you are requested
to clarify the exact extent of such guarantees with the product house prior to advising clients. |
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From the Crow's Nest |
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The power of preservation |
A client who withdraws his or her retirement savings when they
resign can come up with valid reasons, whether to sustain them until
they have another job or paying off debt. However, in the long run,
it is worthwhile to resist the withdrawal and rather transfer their
savings to their new employer’s retirement offering instead.
Thandi Ngwane, head of strategic markets at Allan Gray, recently
explained how clients can protect their retirement saving.
Here is a common scenario: you resign from your job. Finance sends
you a form to choose what you would like to do with your retirement
savings, but offers no further advice and don’t put you in touch
with a financial adviser.
Your options are:
To make a full cash withdrawal, transfer the savings to a
preservation fund or your new employer’s retirement fund or a
combination.
A 2015 survey done by Sanlam found that 77% of people
leaving their jobs were taking their retirement savings as a cash
lump sum. About 63% of them use the money to pay off debt and 57%
use it to cover living expenses while looking for a new job.
Phakama Mlangeni* (33) withdrew her retirement savings when she
resigned from her job of eight years to fund a study break. She
thought she had a good plan in place: pay off her credit card and
revolving loan, pay her fees for two years and draw a small income
for living expenses.
Unfortunately, it didn’t work out that way. After paying off debt
and her fees, the money she had left ran out eight months later. In
no time, she found herself back in debt to cover her living expenses
while studying.
How to get back on track
A retirement income equal to 75% of your final salary is a
reasonable figure to aim towards to live comfortably in your ‘golden
years’.
Phakama is determined to get her retirement savings back on track
when she starts working again in two years’ time after completing
her studies. She will be 35. After using an online retirement
calculator, she realises she will have a 44% shortfall in her
retirement income – or put simply, she may not have enough saved for
a comfortable retirement if she lives beyond the age of 80.
The table below shows she will have to put away 29% of her income
towards her retirement as opposed to just 16% (assuming she started
contributing at age 25) if she had not taken the withdrawal. Putting
away almost 30% of her income may be unrealistic, so she may need to
look at what else she can do to still achieve her goals.
Retirement savings rates needed to ensure 75% Replacement Ratio**
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4% income = 75% replacement ratio if you save at: |
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Return assumption: |
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Age |
CPI + 5% |
CPI + 4% |
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25 |
16% |
20% |
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30 |
21% |
26% |
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35 |
29% |
34% |
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40 |
39% |
45% |
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45 |
56% |
62% |
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**Assuming retirement age of 65 years, investment returns as
indicated above and inflation-related annual salary
increases. |
Phakama started a small business as a personal stylist and
shopper during her career break. If she is able to continue
running her business part-time while working, she could use
the additional income to top up her retirement savings.
She could also delay her retirement by another five years to
age 70 if possible. In this way, she will get a 10-year
boost in her retirement savings through capital growth and
compound interest If she does this, her income after
retirement could be sustained for 35 years until she is 105,
as opposed to just 81 years old if she retires at 65.
The first R500 000 of the cash lump sum you take at
retirement is tax-free. However, any withdrawal you make
from your savings before retirement reduces this benefit. To
avoid a huge tax bill at retirement, Phakama should avoid
taking a lump sum in excess of her tax-free allowance as it
will be heavily taxed. If she has no need for the lump sum
portion at retirement, a better option would be to transfer
the full investment into an income providing investment such
as a living annuity, where it can continue to grow,
tax-free. While she will pay tax on her income from her
living annuity, this will be at her marginal tax rate.
*Not her real name
Click here
to download a copy of the press release for your clients. |
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Discovery Invest products encourage lower draw-downs in retirement
The majority of pensioners
using living annuity products in retirement risk eroding their capital
by drawing more than 5% as an income.
However, clients on the Discovery Linked Retirement Income Plan can now
receive up to 50% more income in retirement, depending on their Vitality
status and as a reward for choosing to withdraw a lower level of
retirement income from their savings.
The current offer, available on all new product applications until
Saturday, 30 June 2018, increases the boost percentage that clients
can receive to the equivalent of Silver Vitality status income boosts,
as per the table below:
Disclaimer
This article is meant only as information and should not be taken as
financial advice. For tailored financial advice, please contact your
financial adviser. Discovery Life Investment Services Pty (Ltd):
Registration number 2007/005969/07, branded as Discovery Invest, is an
authorised financial services provider.
Please
click here to read our full disclaimer. |
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| Your Practice Made Perfect |
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Advisers in employee benefits space |
Delphine Govender, CIO at Perpetua Investment Managers presented to an
audience of diverse investment industry stakeholders at the fifth annual
i3 Summit, jointly hosted by Sanlam Investments and Glacier by Sanlam
last month. She shared with the audience that the ticket to success for
South Africa’s employee benefits consultants and independent financial
advisers (IFAs) is to adapt to change while adding to their value
offering to clients. According to Govender, stakeholders across the
investment value chain will have to adapt to many changes in the savings
landscape, most notably the change in consumer buying patterns on the
back of the continuous acceleration in technology-backed innovation.
She talked about the tendency of financial advisers taking a ‘business
as usual’ approach when it comes to retirement planning. This is the
time to steer away from this approach as the traditional customer
journey has shifted into the digital world and developments such as
blockchain are here to stay. In the past, most customers had one job,
one employer, a pre-determined investment horizon and a predictable
pattern of investing behaviour in a defined benefit (DB) environment.
Both millennial and post-millennial investors now have a totally
different view of the workplace with unique, specific and dynamic advice
needs. The customers have unpredictable expectations and flexible
savings objectives. As she says: “The most important evolution in the
investor journey is that one size no longer fits all,”
Click here to read more. |
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Professional Principal Executive Officer Qualification
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Registrations for the second intake starts of the Professional
Principal Executive Officer Qualification commences today, 18 June 2018.
The course will commence on 30 July 2018. Registration will close on 15 July 2018.
The Professional Principal Executive Officer Qualification is a
much-needed stimulus for the professionalisation of the role of the
Principal Officer which has historically been unstructured and
undefined. It will also support the very important transformation
imperative as it enables learners to obtain a qualification which
may have been inaccessible to working individuals, as well as those
unable to satisfy traditional Higher Education access criteria.
Moonstone Business School of Excellence (MBSE) is the first duly
accredited training provider to offer this qualification.
Given the very important role played by Principal Executive Officers
within the governance structure of a retirement fund, it is surprising
that, up to now, very little was available in the form of a duly
recognised NQF level 7 qualification for those performing this function,
or those aspiring towards it.
This occupational qualification will form the apex of the retirement
functionary learning path, and will be linked to the Council of
Retirement Funds for South Africa (Batseta)’s professional designations.
Who should register?
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Current Principal Officers, trustees and retirement fund
functionaries.
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People working in a claims or employee benefits and compensation
environment who have access to a retirement fund.
Successful learners will be linked to the professional designations
offered by Batseta, the professional body for the profession. The
learning pathway will include the Retirement Fund Trustee qualification.
Registration
You are welcome to contact Frans-Petrus Zeelie at 087 702 6429, or email
frans@mbse.ac.za, who will gladly assist with any questions.
To register, click
here, then on
Enrol today, select Qualifications and
finally click on the Professional Principal Executive Officer button.
For more information, please
click here.
For general queries you may also email us at
learning@mbse.ac.za. |
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Liberty cyberattack
calls for alert
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Today’s LegalBrief reports that the life insurance industry is on high
alert after the cyberattack and blackmail attempt on insurer Liberty.
Business Day reported that the firm had regained control of its IT
systems by yesterday. The insurance industry holds sensitive data on
millions of clients, including their banking details and medical
reports. Liberty dispatched a large team of IT and security specialists
to investigate the breach of its IT infrastructure on Thursday. Its CEO,
David Munro, said yesterday criminals had hacked into an e-mail server
and removed some recent messages, and possibly some attachments. There
was no evidence that client data files had been taken, Munro said. The
hacking affected the core Liberty insurance business and did not spread
to the group’s asset manager Stanlib or to its businesses outside SA.
Munro said he did not believe any Liberty customers would suffer from
financial loss because of the cyberattack. He would not confirm or deny
if there had been inside help in the cyberattack, as a criminal
investigation was under way. Sanlam CEO Ian Kirk, one of Liberty’s
largest competitors, said his IT security team was also working around
the clock to prevent a similar incident at their data centres. Liberty
clients woke up on yesterday morning to read e-mails and SMSs from the
company, explaining that it had been subject to ‘unauthorised access’ of
its IT infrastructure. The firm’s head of public affairs, Sydney Mbhele,
confirmed that an external party claimed to have seized data, alerted
the group to potential vulnerabilities in its IT systems and demanded
payment. Munro said no concessions had been made to the criminals and
Liberty would not meet their ransom demands.
Click here to read the
Full Business Day report. |
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FAIS notice 23 of 2018
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On 15 June 2018, the Financial Sector Conduct Authority published
the Exemption of FSPs from Fees Payable to the Authority in respect
of Certain Amendments to Approved Specimen Mandates, 2018 (“the
Exemption”).
The Determination of Fit and Proper Requirements for Financial
Services Providers, 2017 (“the Determination”), which came into
effect on 1 April 2018, provides that FSPs who were authorised on
1 April 2018 to render financial services in respect of the
financial products listed in Column A of Table C in section 52(14)
will be deemed to be authorised to render financial services in
respect of the corresponding financial products listed in Column B
of that Table.
The purpose of the Exemption is to exempt Category II, IIA and III
FSPs from having to pay the fees in respect of an application for
approval of an amendment to the FSP’s approved specimen mandate to
reflect the products referred to in Column B of Table A.
Click here to
download the FAIS Notice 23 of 2018.
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Regulatory Examinations |
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How to prepare for the REs |
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Inseta has confirmed that they received the updated materials from their
developers and have placed them on their website.
The updated versions can be access via:
http://www.inseta.org.za/inner.aspx?section=4&page=57
The FSCA strongly recommends the use of its
Preparation Guide to prepare for the exams.
The FSCA Preparation Guide suggests the following approach
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STEP |
ACTIVITY |
DESCRIPTION |
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1 |
Refer to the
mapping document for the exam you are planning
to write. |
This is the map of
the tasks/criteria that will be assessed in your
exam, and it contains a reference to the
relevant legislation that you are required to
study in order to understand the task /
criteria. Appendix A in the Preparation Guide |
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2 |
Look at the number
of criteria for each task. |
These are the
knowledge and skill components you require to be
able to perform.
RE 1 has 16 tasks that will be tested
RE 5 has 8 tasks that will be tested
If you have studied all the criteria for every
task, then you would be properly prepared to
write the RE 1 or RE 5 – whichever exam applies to
you. |
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3 |
To prepare for the
exam, you must spend time each day and study the
legislation and supporting training material.
One should systematically select one criteria at
a time. |
Group the criteria
together in groups of 3 or 4 and allocate study
hours per day to prepare. The total number of
hours will individually differ due to ones
circumstances. At least 2 hours per day is the
suggested number of hours. |
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4 |
To start, read the
task, and then the first criteria. Then refer to
the legislation for these criteria, and read the
legislation referred to. |
It is important to
first read the legislation so that you can see
what terms are used and how the legislation is
structured. |
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5 |
Now refer to the
additional support or training material and study
the section in the training material dealing
with those particular criteria. |
The support
material explains the particular concepts in
simple language so that it is easier to
understand what the legislation is actually
saying and what it means. |
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6 |
Then go back to the
legislation itself, and read it again.
Where there are discrepancies, ALWAYS regard the
legislation as being correct. |
Now that you have
gained a better understanding of what the
legislation is about, you may find reading the
legislation again will make more sense to you if
you didn’t understand it the first time around. |
An alternative that you may want to consider is the
LexisNexis Legislation Handbook for RE 1 (key individual)
and RE 5 (representative) exams.
The 5th edition of the Handbook has just been
released and provides the latest legislation specified as
relevant to the regulatory exams RE 1 and 5.
The Handbook has been divided into 5 sections with shaded
tabs on the side for easy access:
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TAB A: FAIS Act and Regulations
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TAB B: Code of Conduct
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TAB C: Fit and Proper
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TAB D: General Acts, Board Notices and Guidance Notes
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TAB E: FIC Act, Regulations and Guidance Notes
The Handbook together with its Preparation Guides provides a
good source to study for the exams. Click here to download
the LexisNexis Preparation Guide for
RE 1 and
RE 5.
The LexisNexis Legislation Handbook has now been updated with all
the new legislation effective from 1 April 2018.
Click here to order your copy from our Advisor Store.
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2018 Schedules updated |
Please note: Registration cut-off is 11 working days before date of exam.
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Careers Platform
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Are you hiring? Advertise your position on Moonstone’s Career Platform
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The Moonstone website -
www.moonstone.co.za
- enjoys an average of 20 000 visits and approximately 39 000 page views per month. |
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Moonstone boasts an exclusive newsletter mailing list of over 51000
dedicated financial decision makers who receive 2 newsletters per week. |
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Our audience is relevant and industry specific: individual and corporate advisors and brokers in the following financial sectors:
iInvestment, Risk, Healthcare, Banking, Retirement, and Insurance. |
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Featured Positions |
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2 x Marketing
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HIC Underwriting Managers Pty Ltd, Bedfordview - We are looking for
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Cooke Fuller Garrun, Kloof, KZN - The ideal candidate should have at
least 5 years experience in Commercial and Personal claims and must be
FAIS qualified.
Read More
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In Lighter Wyn |
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What’s in a Billion? |
I received the following in email format from a friend which sparked the
thoughts below:
The next time you hear a SA politician use the word 'billion' in a
casual manner, think about whether you wanted the politicians
spending YOUR tax money.
A billion is a difficult number to comprehend, but one advertising
agency did a good job of putting that figure into some perspective
in one of its press releases.
A. A billion seconds ago it was 1959.
B. A billion minutes ago Jesus was alive.
C. A billion hours ago our ancestors were living in the Stone Age.
D. A billion days ago no-one walked on the earth on two feet.
E. A billion Rand is spent in only 27 hours and 12 minutes, at the
rate the SA government is spending it.
South Africa is in dire need of big thinkers. While “Ramaphoria” is
still relevantly strong, we need to consider new ways of addressing
our country’s most pressing needs, particularly poverty and
education which form the breeding ground for radicals to gain
traction.
A million Rand seemed a lot of money until fairly recently. A
billion was actually an incomprehensible number for most of us. That
is, until state capture provided us with shocking insight into what
you can achieve if you think big enough.
Just imagine if the amount of money lost in this way could have been
applied towards good causes like infrastructure, notably
municipalities, hospitals, water and sanitation etc. There would be
no need to bail out state owned enterprises, provided of course that
effective management structures were put in place. Ditto the other
troubled agencies.
Imagine if we could arrange a new type of “Dirty Dozen” by pardoning
the main perpetrators of state capture and utilising their ingenuity
in a positive manner?
Thus ends today’s sermon.
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Tel: +27 21 883 8000 | Fax: +27 21 883 8005
info@moonstoneinfo.com
www.moonstone.co.za
P.O. Box 12662, Die Boord, Stellenbosch, 7613, Republic of South Africa
Disclaimer:
Services and products advertised by external product suppliers in
this newsletter are paid for by the respective suppliers. Moonstone
does not endorse any opinions, conclusions, data, products, services
or other information contained in this e-mail which is unrelated to
the official business of Moonstone and furthermore accepts no
liability in respect of the unauthorised use of its e-mail facility
or the sending of e-mail communications for other than strictly
business purposes.
The complete disclaimer can be accessed
here. |
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