Wealth Viewpoint | January 2024

Dear Client

Welcome to our January 2024 edition of FC Viewpoint. All the best for 2024!

IN THE NEWS:

  • The JSE All Share Index is on 72 447 as of Thursday 18 January 2024.
  • 1 US Dollar will cost you R18.21; 1 Pound = R24.01 and 1 Euro = R20.60.
  • Annual consumer inflation (CPI) are at 5% .
  • The prime lending rate in SA is 75% per annum.
  • The price of Oil is $77 per barrel.

THIS MONTH’S TOPIC: RETIREMENT PRODUCTS – AN EMPLOYER’S VIEW

If the company you work for doesn’t offer pension benefits, or if you’re an employer and would like to offer your employees retirement benefits, here are a few things to consider:

What will the employee benefits offer cost the company?

Depending on how you structure the offer, the company doesn’t have to cover the cost of the benefit. Perhaps the salaries will have to be adjusted in year one and two to make provision for compulsory contributions. The company can contribute on behalf of the employee, but it’s not compulsory. The administration and advice fees are deducted from each investor’s account.

Which products to consider?

Depending on the size of the workforce and the monthly salary bill, you can choose between a pension fund, provident fund and a group retirement annuity.

Pension Fund

A pension fund requires an employee-employer relationship which means that an individual can only contribute whilst employed by the company. When they leave the company, the member will need to exit the fund by investing the proceeds in a pension preservation fund or have a portion (or all of it) paid out in cash. Each pension fund needs to have its own set of rules which determines who must contribute, how much they should contribute and at what age they can retire. The rules will also stipulate which underlying funds the investor can choose from (usually a limited number of funds).

Provident Fund

The rules of a provident fund are the same as that of a pension fund. It used to have different rules upon retirement, but it’s been streamlined to match those of a pension fund since March 2021.

Group Retirement Annuity

A group retirement annuity is a number of individual retirement annuities, administered as one. An employer can apply for a group retirement annuity and the employees will have the option to contribute or not (depending on the company’s employment conditions), as long as the total number of employees and the total group contribution adheres to the minimum as set out by the investment company.

The contribution amount can be a fixed amount or a percentage of total earnings. Once the employee leaves the company, their retirement annuity will be removed from the group and they can still contribute to the retirement annuity whenever they choose to do so. They will only have access to these funds once they turn 55, become disabled or 3 years after emigration. There are no fund rules applicable to retirement annuities. Investors will also have the option to pick their own funds for the retirement annuity.

SLIDE OF THE MONTH: THE SOONER YOU START SAVING FOR YOUR CHILD’S EDUCATION, THE GREATHER THE IMPACT ON EDUCATION COSTS

Source: Allen Gray research

TO CONCLUDE

We, at FC Wealth and Investments, are passionate about financial control, helping our clients to get control over their financial matters, keep control, understand their spending and to build lifelong wealth in the process.

We would like to invite you, to make us part of your financial journey, in good and in challenging times and every life changing event in between. Feel free to call us, or to book a physical or online meeting, we are here for you.

Wealth regards,

Fanie Jansen Van Vuuren CA (SA), CFP®

Director: FC Wealth and Investments (Pty) Ltd

E: [email protected]  |  T: 083 384 5868

W: www.fcfin.co.za

Download this issue of Viewpoint here