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Monthly Newsletter – April 2023

Grey-listing – What does it mean for South Africa?

Over the past few months, we have received numerous enquiries about South Africa’s Grey- listing. We hope to provide some insight into what grey-listings and how South Africa came to be grey-listed! The Financial Action Task Force (The Task Force) is a global organisation based in France that promotes policies and sets international standards relating to the combating of money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction. Those countries that do not comply with the Task Force standards are placed on its ‘grey-list.’

In 2019, The Task Force conducted a review of South Africa and issued a report in October 2021. The Task Force determined that South African had too many weaknesses in its legal framework. 

South Africa was placed under a one-year observation period in October 2021, giving the country time to address 67 Recommended Actions.

In short, the Task Force determined it is essential for South Africa to improve its efforts to pursue money laundering and terrorist financing transgressions, detect, and seize illicit cash flows and improve the availability of beneficial ownership information. South Africa was given until 22nd October 2022 to rectify the deficiencies, but they failed to do so, resulting in South Africa being grey-listed on 24th February 2023. Grey listing means that South Africa needs to greatly enhance its monitoring of serious financial crimes and terrorist financing. The most significant implication for South Africa is the reputational damage to the country, as its effectiveness in combatting financial crimes like corruption and money-laundering as well as terror financing are deemed to be below international standards. The compliance and risk management company, Moonstone, has produced an video, “Greylisting: what’s at stake for South Africa.” 

Click the link below to watch this 14-minute video, which we encourage you to watch. It is extremely informative and will provide a clear understanding of what is at stake!

Moonstone – Greylisting, what’s at stake for South Africa

Retirement Annuities

A retirement annuity (RA) is an investment product that allows the investor to contribute lump-sum or regular monthly amounts into an investment to provide the investor with an income in retirement. The benefits of investing in an RA are that contributions are tax deductible but limited to 27.5% of the greater of remuneration or taxable income capped at an annual limit of R350,000. No interest or dividend withholding tax is payable within an RA.

Funds in an RA may not be accessed before the investor turns 55 years old. Upon retiring from the Fund investors have the following options available:

  • Purchase a compulsory annuity with the entire benefit to provide a regular income in retirement.
  • A maximum of 1/3rd of the benefit may be taken as a cash benefit and the remaining 2/3rds of the benefit must be used to purchase an annuity to provide the investor with an income in retirement.
  • If the benefit is less than R247, 500 the entire benefit can be accessed as a cash benefit.

When an investor retires, he or she is taxed according to the retirement tax tables:

(The tax tables were amended for the lump sums accruing from 1st March 2023 and 28th February 2024.)

0 – R550, 000Tax free
R550, 001 – R770, 00018% of the amount over R550, 000
R770, 001 – R1, 155, 000R39, 600 + 27% of the amount over R770, 000
R1, 1550, 001 +R143, 500 + 36% of the amount over R1, 150, 000

Henry Cloud, the New York Times and Wall St. Journal bestselling author whose books have sold nearly 20 million copies made the following quote:

“Our kids aren’t an annuity for our retirement, social system or medical frailty.”

Make sure you start saving for retirement in a retirement annuity today!

Critical Illness Cover

Critical illness cover offers financial protection against illnesses such as heart attack, cancer, stroke, and a wide variety of other listed critical illnesses. PPS also offers a number of ancillary critical illness benefits to supplement the standard critical illness cover.  

  • Critical Illness 100% cover elevates most payments to 100%
  • The child critical illness benefit is automatically included for a child of the PPS member
  • The Expander Rider benefit will expand the definition of lower severity conditions so that PPS will pay out a lump sum percentage (up to 25% of the sum assured with a maximum of R250,000.
  • And, of course, PPS members receive a direct profit allocation to their PPS Profit-Share accounts.

Over the years, advances in medical science mean that many people can survive a critical illness that once was thought of as fatal. Although many people may survive the critical illness,  many will require financial assistance. PPS critical Illness is ideal for providing cover for medical costs and shortfalls, lifestyle changes, special treatments, rehabilitation, and other unexpected expenses. With the PPS critical illness members can focus on their recovery rather than the expensive medical bills!

Isn’t it time you reviewed your PPS policy to make sure that you have all the up-to-date benefits.  We believe that good financial advice and a professional approach remain invaluable in assisting in your financial journey.  Call us today at 041-3730601 to review your PPS benefits.

Changing in Smoking Status

Premiums for PPS products may be paid on a smoking or non-smoking basis depending on the smoking status of the life insured.

If a smoker quits smoking, the life insured can apply for a non-smoking rate provided that:

  • The life assured undergoes a cotinine test at the time of applying for the non-smoking rate,
  • After a waiting period of twelve months a further cotinine test is undertaken,
  • The life assured may be obliged to undertake a further cotinine test at the time of making a claim.

A policyholder must inform PPS insurance in writing if the life assured starts smoking. PPS is entitled to review the terms of the life policy if the life insured starts smoking!

December 2022 – Newsletter

Where did 2022 go?

It appears the year simply raced by! Christmas is upon us and a New Year is dawning. Looking back, 2021 was generally a good year for investors. So how has this year been so far?

In our newsletter last month, we suggested that there are reasons to be optimistic. In fact, we indicated that investing in shares was the bargain of the decade! There are glimmers of hope in the markets.

In November the Johannesburg Stock Exchange All Share Index increased by 10.8% and the MSCI All Country World Index increased by 9.7% in US Dollars [5.7% in South African Rand]. Let’s hope it is the start of a good recovery in the year ahead.

Over the past few months, we have had regular meetings with leading fund managers. The consensus sentiment is that they are generally optimistic. They have been buying shares at cheaper levels and setting upon their portfolios for superior returns in the years ahead.

As the end of the year draws nigh, we would like to thank all our clients and friends for your trust and support throughout this challenging year!  

Save the date

Christmas Shutdown – What is Christmas? It is tenderness for the past, courage for the present, hope for the future. It is a fervent wish that every cup may overflow with blessings rich and eternal, and that every path may lead to peace. – Agnes M. Pharo

Our offices will be closed for the festive season from noon on Thursday 15th December 2022 and will re-open on Monday 9th January 2023. We wish all our clients and friends a blessed Christmas and a joyful prosperous New Year!

Should you require assistance during the Christmas period you can contact Greg at 061 017 3468.

At Christmas let us all pray that the New Year will bring in, an abundance of joy and peace. Let the spirit of love and charity fill our hearts. Merry Christmas to all of you!

“Once in our world, a stable had something in it that was bigger than our whole world.” – C.S. Lewis