2. PRESENTATION TITLE
2
Research: customers understand the importance of long term saving but they also
have immediate needs.
Customers
Needs
Accessibility
Flexibility
Protection
Security
RMM LAUNCHING A NEW SAVINGS RANGE
RMM RESPONSE:
2-IN-ONE SAVINGS 4 EDUCATION
2-IN-ONE SAVINGS 4 MY GOAL
3. PRESENTATION TITLE
2-IN-ONE SAVINGS PLANS REPLACES CURRENT SAVINGS RANGE
3
Smoothed Bonus
Existing Events:
Part Withdrawals, Surrenders, Death
& Disability, Cancellation
Our current offerings:
Focusing mainly on disciplined
Long Term Savings
Smoothed Bonus
Existing Events:
Part Withdrawals, Surrenders, Death
& Disability, Cancellation
Our new offering (2-IN-ONE SAVINGS PLANS):
One savings plan with TWO pockets, allowing focused disciplined Long
Term Savings as well as addressing Short Term Savings needs
2-IN-ONE SAVINGS
PLANS
Money Market Unit
Trust
New Events:
Part or Full Withdrawals, Savings Top-Up,
Premium increase, Premium decrease
4. PRESENTATION TITLE
PRODUCT SET
The following products will be available after the launch of 2-IN-ONE
SAVINGS PLANS:
̶ 2-IN-ONE SAVINGS 4 MY GOAL
̶ 2-IN-ONE SAVINGS 4 MY GOAL (with Premium Waiver Option)
̶ 2-IN-ONE SAVINGS 4 EDUCATION
̶ 2-IN-ONE SAVINGS 4 EDUCATION (with Premium Waiver Option)
̶ Retirement Plan
̶ Single Premium Investment Plan
4
5. PRESENTATION TITLE
PRODUCT FEATURES
• Long Term Pocket fund value increased by amount equal to a number of
premiums after a specified number of premiums have been paid (24, 60, 110)
1. Savings Boosters
• Waiver of premium option – lump sum benefit payable on death/disability
before 10 years
2. Premium Waiver Option
• Extra lump sum deposit into the Short Term Pocket
3. Savings Top-Up
• Premium holidays can be taken up to 6 times during the lifetime of policy
• Increases and decreases of short term contribution facility available after 12
months
4. Flexibility
• Access to the Short Term Pocket anytime
• Access to the Long Term Pocket after 5 years (and every 5 years thereafter)
5. Access
5
6. PRESENTATION TITLE
FAMILY SUPPORT SERVICES
6
Health Support
Legal Support
Trauma, Assault & HIV
Treatment
Emergency Medical
Response
* Same as our existing products
7. PRESENTATION TITLE
WHO IS OUR TARGET MARKET?
Who should buy the 2-IN-ONE SAVINGS PLANS?
• The 2-IN-ONE SAVINGS PLANS are designed for
customers who want to commit to a specific long
term goal, but also want access to money during
this period if required.
• It is not aimed at customers wanting to save solely
for the period shorter than 10 years.
7
10. PRESENTATION TITLE
RETAIL MASS MARKET SOLUTION
10
2-IN-ONE
SAVINGS PLANS
Long Term
Pocket
Short Term
Pocket
Build for the future Deal with today
11. PRESENTATION TITLE
WHY LONG TERM SAVING?
11
A Child’s tertiary education Income after retirement House or other costs
12. PRESENTATION TITLE
WHAT SHORT TERM SAVINGS ARE USED FOR*
12
High Priority Low
Buying big
ticket items
School expenses Lobola House costs:
Maintenance
Coping in
January
Other
payments
*As concluded from the research
13. PRESENTATION TITLE
13
2-IN-ONE SAVINGS
4 MY GOAL
Long Term
Pocket
Short Term
Pocket
2-IN-ONE SAVINGS
4 EDUCATION
Long Term
Pocket
Short Term
Pocket
2-IN-ONE SAVINGS: PRODUCT STRUCTURE
With or without Premium Waiver
Option
With or without Premium Waiver
Option
14. PRESENTATION TITLE
2-IN-ONE SAVINGS: PRODUCT STRUCTURE
14
2-IN-ONE SAVINGS 4 MY
GOAL : Long Term
Pocket
2-IN-ONE SAVINGS 4 MY
EDUCATION : Long Term
Pocket
Regulated by the
Long Term
Insurance Act
15. PRESENTATION TITLE
2-IN-ONE SAVINGS: PRODUCT STRUCTURE
15
2-IN-ONE SAVINGS 4 MY
GOAL : Short Term
Pocket
2-IN-ONE SAVINGS 4 MY
EDUCATION : Short
Term Pocket
Regulated by
the Collective
Investment
Schemes
Control
Act
16. PRESENTATION TITLE
AGE LIMITS: ELIGIBILITY
16
Product Minimum Entry Age Maximum Entry Age
2-IN-ONE SAVINGS 4 MY GOAL 0 N/A
2-IN-ONE SAVINGS 4 MY GOAL
(With Premium Waiver Option)
0
16 - policyholder
N/A
2-IN-ONE SAVINGS 4 EDUCATION 0 – nominated child
14-nominated child
N/A
2-IN-ONE SAVINGS 4 EDUCATION
(With Premium Waiver Option)
0 - nominated child,
16 – policyholder
14 - nominated child,
N/A - policyholder
17. PRESENTATION TITLE
TERMS
17
Product Minimum Terms
When maturity benefit is
available
2-IN-ONE SAVINGS 4 MY GOAL 10 Any age
2-IN-ONE SAVINGS 4 MY GOAL
(With Premium Waiver Option)
10 Any age
2-IN-ONE SAVINGS 4 EDUCATION 10 Any age
2-IN-ONE SAVINGS 4 EDUCATION
(With Premium Waiver Option)
10 Any age
18. PRESENTATION TITLE
GOAL SETTING
18
It is your duty as an adviser to guide your customers to really know and
understand their financial goals.
The new savings plans can help your customers to pay for their shorter term expenses such as school fees or
buying new tyres for a car but it can also assist them to achieve their long-term goals like buying a car or paying
for a child’s studies.
A customers’ goals will be determined by their life stage but also by the ages and number of their dependants.
An extract from the application form.
Refer to the Advice led conversation workbook: Activity 1
20. PRESENTATION TITLE
PREMIUM WAIVER OPTION: (PROTECTION)
The Option is only available for the 2-IN-ONE SAVINGS 4 EDUCATION
and 2-IN-ONE SAVINGS 4 MY GOAL.
It can only be selected on application of the policy.
It protects the customer’s savings only for the first 10 years, irrespective of the
term selected by the customer.
It costs a customer an additional 10% of the long term premium, for10 years
only, thereafter this additional amount is paid to the Long Term Pocket.
There is a 6 months waiting period on death or (certain) disability as a
result of natural causes.
20
Long Term Pocket
ONLY
21. PRESENTATION TITLE
PREMIUM WAIVER OPTION: 2-IN-ONE SAVINGS 4
EDUCATION
21
15 years10 years6 months
Customer dies or becomes disabled due to Natural Causes before
6 months.
Pay out fund value
to beneficiaries or
to client
Customer dies or becomes disabled due to Natural Causes after 6 months
and before 10 years.
Lump sum injected into Long Term
Pocket. Policy made paid up.
Customer dies or becomes disabled due to Natural Causes after10 years.
Pay out fund value
to beneficiaries or
to client
Long Term PocketShort Term Pocket
Pay out
investment
value to Estate /
to client
Death: Pay out investment value
to Estate
Disablement: policy made paid-up
Pay out investment
value to Estate or to
client
22. PRESENTATION TITLE
PREMIUM WAIVER OPTION: 2-IN-ONE SAVINGS 4
EDUCATION
22
15 years10 years6 months
Customer dies or becomes disabled due to accident before 10 years.
Lump sum injected into Long Term Pocket. Policy made
paid up.
Customer dies or becomes disabled due to accident after10 years.
Pay out fund value to
beneficiaries or to
client
Long Term PocketShort Term Pocket
Death: pay out investment value to Estate
Disablement: policy is made paid-up
Pay out investment
value to Estate or to
client
23. PRESENTATION TITLE
PREMIUM WAIVER OPTION: 2-IN-ONE SAVINGS 4 MY GOAL
23
15 years10 years6 months
Customer dies or becomes disabled due to Natural Causes before
6 months.
Fund value to
beneficiaries or to
client
Customer dies or becomes disabled due to Natural Causes after 6 months
and before 10 years.
Lump sum injected into Long Term
Pocket. Pay out fund value to
beneficiaries or to client
Customer dies or becomes disabled due to Natural Causes after10 years.
Pay out fund value to
beneficiaries or to
client
Long Term PocketShort Term Pocket
Pay out investment
value to Estate or
to client
Pay out investment value to Estate
or to client
Pay out investment
value to Estate or to
client
24. PRESENTATION TITLE
PREMIUM WAIVER OPTION: 2-IN-ONE SAVINGS 4 MY GOAL
24
15 years10 years6 months
Customer dies or becomes disabled due to accident before 10 years.
Lump sum injected into Long Term Pocket. Pay out fund
value to beneficiaries or to client
Customer dies or becomes disabled due to accidents after10 years.
Pay out fund value to
beneficiaries or to
client
Long Term PocketShort Term Pocket
Pay out investment value to Estate or to client
Pay out investment
value to Estate or to
client
25. PRESENTATION TITLE
WHAT HAPPENS IF THE CLIENT DIES?
25
Product Long Term Pocket Short Term Pocket
2-IN-ONE SAVINGS 4 MY
GOAL
Fund value pays to beneficiaries
Fund value pays to customer’s
estate
2-IN-ONE SAVINGS 4 MY
GOAL (with Premium Waiver)
Lump sum injection up to Year
10 and then Fund value pays to
beneficiaries
2-IN-ONE SAVINGS 4
EDUCATION
Fund value pays to beneficiaries
2-IN-ONE SAVINGS 4
EDUCATION(with Premium
Waiver)
Within 10 years: made paid-up
After10 years: fund value pay to
the beneficiaries
Retirement Plan To SARAF N/A
26. PRESENTATION TITLE
WHAT HAPPENS IF THE CLIENT BECOMES DISABLED?
Product Long Term Pocket Short Term Pocket
2-IN-ONE SAVINGS 4 MY
GOAL
Fund value pays to the customer
Fund value pays to the customer
2-IN-ONE SAVINGS 4 MY
GOAL (with Premium Waiver)
Lump sum injection up to Year
10 and then Fund value pays to
beneficiaries
2-IN-ONE SAVINGS 4
EDUCATION
Fund value pays to the customer
2-IN-ONE SAVINGS 4
EDUCATION(with Premium
Waiver)
Within 10 years: made paid-up
After10 years: fund value pay to
the client
If Long Term Pocket is made
paid-up, the Short Term Pocket
is also made paid up
If the Long Term Pocket fund
value is paid out, the Short Term
Pocket fund value is also paid
out
Retirement Plan Fund value pays to the client
(subjected to R75 000 rule)
N/A
26
27. PRESENTATION TITLE
WHAT HAPPENS AT THE END OF THE TERM?
27
Product Long Term Pocket Short Term Pocket
2-IN-ONE SAVINGS 4 MY
GOAL
Transfer to Short Term Pocket
After Long Term Pocket fund
value transferred to Short Term
Pocket, Short Term Pocket
remains paid-up until the
customer claims the maturity
proceeds
2-IN-ONE SAVINGS 4 MY
GOAL (with Premium Waiver)
2-IN-ONE SAVINGS 4
EDUCATION
2-IN-ONE SAVINGS 4
EDUCATION(with Premium
Waiver)
Retirement Plan Fund value pays to the
customer(subjected to R75 000
rule).
N/A
28. PRESENTATION TITLE
THE FINANCIAL PLAN
28
It is your duty as an adviser to have an in depth conversation with your
customers in order to gain the required information for you to be able to help
them create a financial plan.
You must record more detailed and specific information around the customers goals. This applies to recording
values to help the customer develop a financial plan to reach their goals.
You have to determine their needs and their current circumstances to be able to determine whether any gaps or
shortfalls exist. You can only do this by asking the right questions.
An extract from the application form focussing only on the new savings plans.
Refer to the Advice led conversation workbook: Activity 2
30. PRESENTATION TITLE
HOW WILL CONTRIBUTIONS BE COLLECTED? – ONE SAVINGS PLAN WITH TWO
POCKETS
30
Total Contribution is collected from the Customer
Contribution will be split into the Long Term Pocket
and the Short Term Pocket
Total
Contribution
Long Term Pocket Short Term Pocket
R150 R130 R20
R160 R130 R30
R900 R585 R315
R2000 R1300 R700
Access to funds Existing product rules
apply
Full balance available (48
hour notice)
Example: without waiver benefit
For contribution from R150 – R200 a month:
R130 goes into long term and the rest goes into the
short terms savings
For contributions over R200 a month:
65% goes to long term and 35% to short term
Contribution
Collection
Contribution
Split
Smoothed Bonus Money Market Unit
Trust
31. PRESENTATION TITLE
MINIMUM CONTRIBUTION (WITHOUT PREMIUM WAIVER)
31
2-IN-ONE
SAVINGS
Plan
Long Term
Pocket
Short Term
Pocket
R150
R130 R20
Total contribution Less R130 equals short term contribution
32. PRESENTATION TITLE
CONTRIBUTIONS ABOVE R200 (WITHOUT PREMIUM
WAIVER)
32
2-IN-ONE
SAVINGS
Plan
Long Term
Pocket
Short Term
Pocket
R300
R195 R105
65% of total contribution 35% of total contribution
33. PRESENTATION TITLE
MONTHLY CONTRIBUTION TABLE (WITHOUT PREMIUM
WAIVER)
33
Total
Contribution
Long term premium Short term contribution
R150 R130 R20
R200 R130 R70
R250 R162.50 R87.50
R300 R195 R105
R400 R260 R140
R500 R325 R175
R1000 R650 R350
R2000 R1300 R700
If the total contribution is > R2000, customer should be offered a choice to
speak a Retail Affluent PFA
35. PRESENTATION TITLE
MONTHLY CONTRIBUTIONS TABLE
WITH PREMIUM WAIVER OPTION
35
Total
contributi
on
Long term premium Premium for
Premium Waiver
Short term
contribution
R165 R130 R13 R22
R200 R130 R13 R57
R250 R152.58 R15.26 R82.16
R300 R183.10 R18.31 R98.59
R400 R244.13 R24.41 R131.45
R500 R305.17 R30.52 R164.32
R1000 R610.33 R61.03 R328.64
R2000 R1220.66 R122.07 R657.27
36. PRESENTATION TITLE
REGULAR FEES
36
Long Term Pocket Short Term Pocket
Regular Premium fee 15% of each long term
premium
plus
R10* (2-IN-ONE SAVINGS 4
MY GOAL & EDUCATION)
No fee
Investment and
administration fee
1.25% per year No fee
Guarantee fee 0.25% per year No fee
Fund management fee 0.25% per year 0.57% per year
*These fees are annually reviewable and subject to change
37. PRESENTATION TITLE
AFFORDABILITY
37
It is your duty as an adviser to conduct an affordability analysis with your
customers. The main focus of this is to analyse your customers’ expenses
The core of every affordability analysis should be to understand what your customers spend their money on and
what expenses could be reduced to increase their disposable income.
You must educate your customers on how to wisely use this extra money that will be available after unnecessary
expenses have been reduced for example:
Increase their savings by increasing their premium that goes into the short term pocket or using the
savings Top-up Benefit.
An extract from the application form .
Refer to the Advice led conversation workbook: Activity 3
39. PRESENTATION TITLE
CONTRIBUTION INCREASES
39
Annual Contribution Increase
Long Term
Pocket
Short Term
Pocket
1st July every year after the policy has been in force for 6 months
It applies to both the
Long Term premium & Short
Term contribution
Linked to Inflation
40. PRESENTATION TITLE
SHORT TERM CONTRIBUTION INCREASES AND
DECREASES
40
1 2 3 4 5 6 7 8 9 10 11 12
13 14 15 16 17 18 19 20 21 22 23 24
No changes allowed within the first 12 contributions
Changes allowed after paying 12 contributions
A customer can increase or decrease their short
term contribution by at least R20 once every year.
For Short
Term Pocket
ONLY!!!!
42. PRESENTATION TITLE
SAVINGS TOP-UP: (FOR FLEXIBILITY)
42
1 2 3 4 5 6 7 8 9 10 11 12
Minimum=R250
Maximum =R5000
Any time after inception of the policy
ONCE OFF DEBIT ORDER
ARRANGED AT A
CUSTOMER SERVICES
BRANCH
Any amount for the Savings Top-up will first be used to pay the long
term premiums that may be in arrears.
Note that the limits can be reviewed
Months
44. PRESENTATION TITLE
SAVINGS BOOSTERS: (FOR ENCOURAGEMENT)
44
When: Savings Boosters is an amount equal to:
After 24 premiums Sum of the last 2 long term premiums
After 60 premiums Sum of the last 3 long term premiums
After 110 premiums Sum of the last 8 long term premiums
To Motivate our customers to be disciplined in their long term
savings. It is paid to the Long Term Pocket only.
For Long
Term Pocket
ONLY!
49. PRESENTATION TITLE
KEY RISKS
The amount of savings at maturity, death or disability might not be enough to
meet the intended financial goal or need.
The annual bonus on the Long Term Pocket and the interest on the Short
Term Pocket may be less than inflation, resulting in the buying power of the
fund value being reduced.
Beneficiaries must be made aware of the death benefit available in order to
notify Old Mutual of the policyholder’s death. This will speed up the payout
process.
Part Withdrawals are allowed from the Long Term Pocket after the first 5
years of the policy.
There is an additional premium amount payable for the Premium Waiver
Option.
49
50. PRESENTATION TITLE
PRIORITIES & BENEFIT RECOMMENDATION
50
Priorities are established by the customer not the adviser, however, as the
adviser, you have an obligation to guide and educate the customer through
this process.
You have to make the customer aware of certain prioritisation risks for example:
The customer identified a higher priority for funeral cover over saving for retirement. This will not be in
the customer’s best interest if there is currently no provision for retirement and sufficient cover in place
for dependants.
For every shortfall there must be a priority and for every priority there must be
a benefit recommendation.
You have to make the customer aware of certain product risks for example:
If a customer chooses the 2-IN-ONE Savings for my Goal (Without the Premium Waiver Option) rather
than the 2-IN-ONE Savings for my Goal (With the Premium Waiver Option), Old Mutual will not inject a
lump sum into the policy in the event of the customer’s death or disability.
Refer to the Advice led conversation workbook: Activity 4
52. PRESENTATION TITLE
PREMIUM HOLIDAY
Can miss up to 6 contributions during the term of the policy
Automatic premium holiday:
̶ 1 per year, can accumulate up to 6 premium holiday
̶ Automatically applied if contribution is not received when due
Requested premium holiday:
̶ Qualify for 6 after paying 6 contributions
Automatic premium holiday + Requested premium holiday cannot be more
than 6 over the term of the policy
Short term pocket in premium holiday:
̶ Savings Top-up allowed
̶ Withdrawals allowed
52
55. PRESENTATION TITLE
PART WITHDRAWALS
55
Year 1 Year 2
1 2 3 4 5 6 7 8 9 10 11 12
Short Term Pocket
Long Term Pocket
Free of
charge
Free of
charge
Free of
charge
Free of
charge R50
R300+
Reducing
fee
R300+
Reducing
fee
Years
56. PRESENTATION TITLE
SURRENDER
56
The customer can withdraw the full accumulated balance from the Short Term
Pocket at any time.
It will remain active, even with a balance of zero, as long as the Long Term
Pocket is still receiving premiums.
A customer can start to pay contributions towards the Short Term Pocket again at
anytime, but change is allowed once a year.
If a customer surrenders the Long Term Pocket the entire policy will cease.
1 122 73 6 11 135 8 9 10 144
Short term contribution
Long term premium
14
57. PRESENTATION TITLE
PAID-UP
57
1 92 3 8 104 5 6 7 11
Short term contribution
Long term premium
1615 1712 13 14 18 19 20
Automatic paid-up : if client stop paying contributions and they have used up all their
premium holidays.
If the Long Term Pocket is paid-up then the Short Term Pocket must also be paid-
up
The accumulated fund value will continue to grow with smoothed bonuses and
interest
A customer can also request for their 2-IN-ONE SAVINGS PLANS to be made paid-up at
any time, as long as the minimum fund value is greater than R1000 after a paid-up
charge is taken off.
58. PRESENTATION TITLE
CASUAL EVENT CHARGES
58
Long Term Pocket Short Term Pocket
Part withdrawal R300* + reducing fee.
Sum must not be more than
30% of fund value
First 2 per calendar year free
R50* per additional withdrawal
Paid-up R300* + reducing fee
Sum must not be more than
30% of fund value
No charge
Surrender (from active
status)
R300* + reducing fee
Sum must not be more than
30% of fund value
No charge
Surrender (from paid-up
status)
R155*, which must not be
more than 30% of fund
value
No charge
*These fees are annually reviewable and subject to change
59. PRESENTATION TITLE
CASUAL EVENT REDUCING FEE
59
Start at 15% at the time of application and reduces monthly over the
charge term to 0%.
Charge term is half of the term, but at least 5 years and at most 10
years.
60. PRESENTATION TITLE
CASUAL EVENT REDUCING FEE - EXAMPLE
60
2-IN-ONE SAVINGS PLAN with a term of 10 years
15%
0%
Application
Date
5 years
Charge term:
10 years / 2 = 5 years
61. PRESENTATION TITLE
CASUAL EVENT REDUCING FEE - EXAMPLE
61
2-IN-ONE SAVINGS PLAN with a term of 20 years
15%
0%
Application
Date
10 years
(120 premiums)
Reduction term:
20 years / 2 = 10 years
62. PRESENTATION TITLE
CASUAL EVENT REDUCING FEE - EXAMPLE
62
2-IN-ONE SAVINGS PLAN with a term of 30 years
15%
0%
Application
Date
10 years
(120 premiums)
Reduction term:
30 years / 2 = 15 years
It’s greater than 10 years,
so reduction term = 10
years
63. PRESENTATION TITLE
REVIEW
63
Key elements to keep in mind for review
•Advisers must review a customer’s Financial plan at least every 6 months or at a frequency preferred by the
customer.
•Advisers must agree on a next visit date at each interaction with the customer.
•The review does not necessarily lead to a sale.
•Do not re-do a financial plan with each visit, use the previous financial plan as a base to work from.
•Review is an important part of both relationship management and building trust between the adviser and
customer.
65. PRESENTATION TITLE
65
Normal Bank Savings
Smoothed Bonus Fund: Education/Investment Plans
Smoothed Bonus Fund: Retirement Plan
Normal Balanced Fund
Years
SavingsValue
Growth
Smoothing
Smoothing
Tax Benefits
SMOOTHED BONUS FUND
Normal Bank Savings
Smoothed Bonus Fund: 2-IN-ONE SAVINGS 4 MY GOAL & EDUCATION
Smoothed Bonus Fund: 2-IN-ONE SAVINGS 4 RETIREMENT
Balanced Fund without smoothing
67. PRESENTATION TITLE
2-IN-ONE: HOW SAVINGS ARE INVESTED
Long Term Pocket
Savings in the Long Term Pocket are all invested in the Old Mutual Smoothed
Bonus Fund.
The fund then invests in a mix of investments, such as:
a) High growth investments:
………?…………..and…………?……………
a) Medium growth investments: ……………?…………………..
b) Low growth investments: ……………?………………
c) Foreign investments: ……………?…………………
67
68. PRESENTATION TITLE
2-IN-ONE: HOW SAVINGS ARE INVESTED
Long Term Pocket
a. This is a ……………?…………. risk fund: Under bad market conditions,
customers may get less than what was invested.
b. Customers’ savings grow by………?………… declared in
…………?…………..each year for the previous year.
c. Guaranteed to receive not less than ………………?…………. at:
a) Death, Disability or Maturity
d. Guarantee falls away on ………?……… or ………?…….. or
…………?…………..
68
69. PRESENTATION TITLE
2-IN-ONE: HOW SAVINGS ARE INVESTED
These fees are taken from the annual bonus before added to customers’
savings.
69
Fees As a % of Fund Value
Investment & Administration Fee ? % per year
Guarantee Fee ? % per year
Fund Management Fee ? % per year
70. PRESENTATION TITLE
2-IN-ONE: HOW SAVINGS ARE INVESTED
Short Term Pocket
a) Savings in the Short Term Pocket are all invested in the …………… Fund.
b) The fund then invests in …………?…………. and other banking investments.
c) This is a …………?…………. risk fund: Very small chance that customers
would get less than what was invested.
d) Customers’ savings grow by …………?…………… , which is added at the
end of each month .
70
71. PRESENTATION TITLE
2-IN-ONE: HOW SAVINGS ARE INVESTED
Short Term Pocket
For customers exiting, the interest earned up that day is ………?……...to the
fund invested in the Short Term Pocket.
These fees are taken from the ………………?………….. before added to
customers’ savings .
71
Fees As a % of Fund Value
Investment & Administration Fee ? % per year
Guarantee Fee ? % per year
Fund Management Fee ? % per year
73. PRESENTATION TITLE
SUMMARY
73
Feature Short Term Pocket Long Term Pocket
Minimum starting
premium
R150
Minimum term 12 premiums
(After which changes are
possible)
10 years
Withdrawal of funds Full balance available
(in 5 business days).
A part withdrawal possible
after 5 years, thereafter
every 5 years
Annual premium
increases
Annual increase Annual increase
Premium increases
(any time)
After 12 premiums are
paid (minimum R20
increase)
Not allowed
Premium decreases
(any time)
After 12 premiums are
paid (minimum R20
decrease)
Not allowed
74. PRESENTATION TITLE
SUMMARY
74
Feature Short Term Pocket Long Term Pocket
Savings Top-up Can be made at anytime,
(Minimum and maximum
limits apply)
Not allowed
Savings Boosters None Depending on the number
of premiums paid, Old
mutual will deposit extra
funds into the fund value
75. PRESENTATION TITLE
SUMMARY
75
Retail Mass Market
2-IN-
ONE
SAVINGS
PLANS
Customers with Long &
Short Term savings needs ONE savings plan with
TWO pockets
Listening & Responding
to our customers’
needs
• Saving for Future Goals through the Long Term
Pocket
• Access to Savings in the Short Term Pocket
August 2014
78. PRESENTATION TITLE
RETIREMENT PLAN: UNIQUE FEATURES
For the retirement benefit larger than R75 000, only up to 1/3 can be taken
as cash, while the rest must be used to buy an annuity.
78
R50 000
R50 000
R50 000
3/3 = R150 000
1/3 = R50 000
2/3 = R100 000
79. PRESENTATION TITLE
RETIREMENT PLAN: UNIQUE FEATURES
For the retirement benefit lower than R75 000, the full amount may
be taken as cash.
79
R20 000
R20 000
R20 000
3/3 = R60 000
R60 000
3/3 = R60 000
<R75 000
Cash payout
80. PRESENTATION TITLE
Advantages of a RETIREMENT PLAN
The long-term premiums are tax-deductible, up to a limit. For tax-paying
customers, this reduces the overall tax they owe SARS.
Investment growth on the Long Term Pocket is not taxed, which means the
savings growth is higher than other plans, every year.
A portion of the retirement benefit from the Long Term Pocket is not taxed
when taken as cash, up to a certain limit.
80
RETIREMENT PLAN: UNIQUE FEATURES
81. PRESENTATION TITLE
RETIREMENT PLAN: UNIQUE FEATURES
Restrictions of a RETIREMENT PLAN
Retirement may only occur after age 55. This means that the retirement
benefit is only available after age 55. Before age 55, the following 3 types of
payouts are possible:
………………?……………….
………………?……………….
………………?……………….
81
So, why are we launching this new product?
Well, the findings from the Old Mutual Savings Monitor as well as market research conducted through focus groups identified that although customers appreciate the importance of disciplined savings over the long term, they also expressed day-to-day financial difficulties which were not addressed by our existing product range.
We understood that it was necessary to develop a savings product that was different to our current savings product range.
Our existing product offering is designed to meet a customer’s need for disciplined saving for the medium to long term. It provides elements of flexibility, such as premium holidays, allowing part withdrawals or for the product to become paid up or allowing a full surrender. We believe our existing savings product range provides value for money if customers continue to contribute to their policies for the full term, do not access their fund values via part withdrawals and do not surrender their policies.
Having said that we acknowledge that the socio-economic climate of South Africa has resulted in changes in consumer behaviour, as well as the levels of disposable income, and subsequently the needs of our target market has changed. As a result, our existing product range might not fully address the changing needs for all customers.
We hope the 2-IN-ONE SAVINGS PLANS will address the many identified financial needs of our customers. The product is sold as one unit but consists of two separate products (the Long Term policy and Money Market Unit Trust). One premium is collected monthly and Retail Mass, splits the premium between a Short Term Pocket (the Money Market Unit Trust) and the Long Term Pocket (the long term policy). The Short Term Pocket offers some additional features e.g a Savings Top-Up, but we will discuss this later. The Long Term Pocket is the portion of the Savings Plan that aims to achieve future goals while the Short Term Pocket is the portion of the savings plan that allows accessibility whenever money is needed.
The list shows the great features in the 2-IN-ONE SAVINGS PLANS. Let’s get into more detail in the next few slides.
(question / table on page 4 of workbook)
The Family Support Services available for the 2-IN-SAVINGS PLANS include health support, legal support, trauma assault & HIV Treatment and Emergency Medical Response
The identified target market for this proposed product is customers with a household income of between R5,000 and R19,000 per month.
The product is aimed for customers who want to commit to a specific long term goal but who also want to be able to access their money at some points during the term of the policy without being penalized for doing so.
The product is not suitable for customers who want:
To save solely for a period shorter than 10 years
To save only for the long term, without short term savings
To have their own choice of investment funds
(workbook page 3)
The 2-IN-ONE SAVINGS PLANS will allow customers to fulfil their financial needs both in the short term and in the long term. They will pay a single contribution every month, and Old Mutual will split each contribution between a Short Term Pocket and a Long Term Pocket. It is important to note that although each Savings Plan is marketed and packaged as a single offering, the Short Term Pocket and the Long Term Pocket are two separate products and each will have its own contract.
The Long Term Pocket aims to help customers achieve a future financial goal, while the Short Term Pocket allows accessibility whenever money is needed.
(question on page 3 of the workbook)
The purpose of the long term pocket is to save for 10 years or longer . Examples of long term financial goals
(question on page 3 of the workbook)
The short term pocket offers accessibility and it can be used to pay for smaller financial needs and unplanned emergency expenses. Examples of these are big ticket items like televisions and appliances, lobolo, school expenses
(workbook page 4)
The two 2-IN-ONE SAVINGS PLANS will have a Long Term Pocket and a Short Term Pocket
(workbook page 4)
The Long Term Pockets of the 2-IN-ONE SAVINGS 4 MY GOAL AND 2-IN-ONE SAVINGS 4 EDUCATION are regulated by the Long Term Insurance Act.
(workbook page 4)
All Short Term Pockets are regulated by the the Collective Investment Schemes Control Act
(question / table on page 4 of workbook)
There are no age limits for the 2-IN-ONE SAVINGS 4 EDUCATION or 2-IN-ONE SAVINGS 4 MY GOAL plans, except for 2-IN-ONE SAVINGS 4 EDUCATION (With Premium Waiver Option)
(question / table on page 4 of workbook)
The customer may choose the term for the 2-IN-ONE SAVINGS 4 EDUCATION and 2-IN-ONE SAVINGS 4 MY GOAL , but there is a minimum term of 10 years. The maturity benefit will be available at the end of the chosen term.
(workbook page 9)
The Premium Waiver Option is designed to protect customers’ savings if they die or become disabled within the first 10 years of the policy. It is only available for the 2-IN-ONE SAVINGS 4 EDUCATION and 2-IN-ONE SAVINGS 4 MY GOAL, and the option can only be selected on application of the policy.
The Premium Waiver Option is entirely optional at application and cannot be removed later.
The cost of the Premium Waiver Option is 10% of the long term premium.
The protection is only offered for the first 10 years of the policy, irrespective of when the term of the policy. After the first 10 years the total contribution will remain unchanged and the extra premium for the premium waiver will become part of the long term premium.
There is a 6 month waiting period for death or disability from natural causes, and no waiting period for accidental death or disability.
Long Term Pocket:
If a customer dies from or becomes disabled due to natural causes within the first 6 months of the policy, Old Mutual will pay out the full fund value to beneficiaries (in case of death) or to customer (in case of disablement).
If a customer dies from or becomes disabled due to natural causes after 6 months and before 10 years from the application date of the policy, Old Mutual will inject the lump sum into the Long Term Pocket, after which the policy will be made paid-up.
If a customer dies from or becomes disabled due to natural causes after 10 years from the application date of the policy, Old Mutual will pay out the full fund value to beneficiaries (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit only cover the customer in the first 10 years.
If a customer becomes disabled due to natural causes within the first 6 months, then they have 2 options. They can carry on paying contributions and the policy will continue as is or they can make a valid disability claim and Old Mutual will pay out the full fund value.
Short Term Pocket:
If a customer dies from or becomes disabled due to natural causes within the first 6 months of the policy, Old Mutual will pay out the accumulated investment value to the customer’s estate (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit is only applicable to the Long Term Pocket. This applies throughout the term of the policy.
If a customer dies from or becomes disabled due to natural causes after 6 months and before 10 years from the application date of the policy, the accumulated investment value will be paid to the customer’s estate (in case of death), the short term pocket is made paid-up (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit is only applicable to the Long Term Pocket. This applies throughout the term of the policy.
If a customer dies from or becomes disabled due to natural causes after 10 years from the application date of the policy, Old Mutual will pay out the accumulated investment value to the customer’s estate (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit is only applicable to the Long Term Pocket. This applies throughout the term of the policy.
It is important to note that fund value from Long Term Pocket is pay out to the beneficiaries on death, but the accumulated investment value from the Short Term Pocket is paid out to the customer’s estate on death.
Long Term Pocket:
If a customer dies from or becomes disabled due to accident within the first 10 years of the policy, Old Mutual will inject the lump sum into the Long Term Pocket, after which the Long Term Pocket will be made paid-up.
If a customer dies from or becomes disabled due to accident after 10 years from the application date of the policy, Old Mutual will pay out the full fund value to beneficiaries (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit only cover the customer in the first 10 years.
Short Term Pocket:
If a customer dies from or becomes disabled due to accident within the first 10 years of the policy, Old Mutual will pay out the accumulated investment value to the customer’s estate (in case of death) or the Short Term Pocket is made paid-up (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit is only applicable to the Long Term Pocket. This applies throughout the term of the policy.
If a customer dies from or becomes disabled due to accident within after 10 years from application date, Old Mutual will pay out the accumulated investment value to the customer’s estate (in case of death) or to the customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit is only applicable to the Long Term Pocket. This applies throughout the term of the policy.
It is important to note that fund value from Long Term Pocket is pay out to the beneficiaries on death, but the accumulated investment value from the Short Term Pocket is paid out to the customer’s estate on death.
Long Term Pocket:
If a customer dies from or becomes disabled due to natural causes within the first 6 months of the policy, Old Mutual will pay out the full fund value to beneficiaries (in case of death) or to customer (in case of disablement).
If a customer dies from or becomes disabled due to natural causes after 6 months and before 10 years from the application date of the policy, Old Mutual will inject the lump sum into the Long Term Pocket, after which the full fund value will be paid out to the beneficiaries (in case of death) or to customer (in case of disablement). .
If a customer dies from or becomes disabled due to natural causes after 10 years from the application date of the policy, Old Mutual will pay out the full fund value to beneficiaries (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit only cover the customer in the first 10 years.
If a customer becomes disabled due to natural causes within the first 6 months, then they have 2 options. They can carry on paying contributions and the policy will continue as is or they can make a valid disability claim and Old Mutual will pay out the full fund value.
Short Term Pocket:
If a customer dies from or becomes disabled due to natural causes, Old Mutual will pay out the accumulated investment value to the customer’s estate (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit is only applicable to the Long Term Pocket. This applies throughout the term of the policy.
It is important to note that fund value from Long Term Pocket is pay out to the beneficiaries on death, but the accumulated investment value from the Short Term Pocket is paid out to the customer’s estate on death.
Long Term Pocket:
If a customer dies from or becomes disabled due to accident within the first 10 years of the policy, Old Mutual will inject the lump sum into the Long Term Pocket, after which the full fund value will be paid out to the beneficiaries (in case of death) or to customer (in case of disablement). .
If a customer dies from or becomes disabled due to accident after 10 years from the application date of the policy, Old Mutual will pay out the full fund value to beneficiaries (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit only cover the customer in the first 10 years.
Short Term Pocket:
If a customer dies from or becomes disabled due to accident, Old Mutual will pay out the accumulated investment value to the customer’s estate (in case of death) or to customer (in case of disablement). There will be no lump sum injection as the Premium Waiver benefit is only applicable to the Long Term Pocket. This applies throughout the term of the policy.
It is important to note that fund value from Long Term Pocket is pay out to the beneficiaries on death, but the accumulated investment value from the Short Term Pocket is paid out to the customer’s estate on death.
(workbook page 9)
On death, the fund value from the Long Term Pocket is paid to beneficiaries , but the Short Term Pocket accumulated investment value is paid out to the customer’s estate.
Please note that within the first 10 years, for the 2-IN-ONE SAVINGS 4 EDUCATION (with Premium Waiver Option), the Long Term Pocket goes paid up in case of the customer’s death.
(workbook page 9)
On disablement, the fund value from the Long Term Pocket and the Short Term Pocket accumulated investment value are paid out to the customer.
Please note that within the first 10 years, for the 2-IN-ONE SAVINGS 4 EDUCATION (with Premium Waiver Option), the Long Term Pocket goes paid up in case if the customer becomes disabled.
(workbook page 9)
At maturity, for the non-retirement plans, the fund value of the Long Term Pocket will be transferred to the Short Term Pocket. The Short Term Pocket will remain paid-up until the customer comes to claim the money. Withdrawals will be allowed, but no more Savings Top-up will be allowed.
For Retirement Plan, the fund value at retirement will be subjected to the R75 000 rule.
Contributions will be collected either via debit order or stop order. No cash collection or cash payments will be permitted.
A contribution is made to the Savings Plan every month. Old Mutual splits the contribution between the Short Term Pocket and the Long Term Pocket. The Long Term pocket is the portion of the Savings plan that aims to achieve the future goal (e.g. Education or another savings goal). This portion saves money for at least 10 years.
The Short Term Pocket is the portion of the Savings Plan that is accessible to the customer whenever money is required.
The minimum premium is R150. This amount is reviewed annually and will increase over time as the cost of living increases. For starting premiums between R150 and R200, R130 will be paid into the Long Term Pocket and the rest into the Short Term Pocket.
For policies without premium waiver benefit, premiums above R200, 65% will be paid into the Long Term Pocket and 35% into the Money Market Pocket.
For an average customer that pays a premium of R240, this means that after a 12 month period, the customer can have access to approximately R1,000 (excluding interest and earlier withdrawals).
Monthly contributions increase in July each year, given the product has been active for at least 6 months. As is currently the case, the increase is determined by Old Mutual and will be related to the level of inflation.
(question on page 5 of workbook)
The minimum monthly contribution is R150 for plans without the Premium Waiver Option. R130 of the total contribution goes into the Long Term Pocket and this portion is referred to as the long term premium. The remaining R20 goes into the Short Term Pocket and is called as the short term contribution.
For all contributions below R200, the long term premium will be R130 and the rest will make up the short term contribution.
For monthly contributions of R200 and greater, 65% forms the long term premium, while the other 35% makes the short term contribution.
In this example the total contribution is R300. 65% of this is R195 which is paid into the Long Term Pocket and the other R105 which is 35% of the total goes into the Short Term Pocket.
(question / table on page 5 of workbook)
This table shows the contribution split for various monthly contribution amounts.
(question on page 4 of workbook)
For 2-IN-ONE SAVINGS PLANS with the Premium Waiver Option the minimum contribution is R165. The premium for Premium Waiver is the extra amount that the customer pays for the Premium Waiver option. This is always equal to 10% of the long term contribution. In this example, the long term premium is R130, so the premium for Premium Waiver is R13. The remaining amount of R22 goes into the short term pocket.
For contributions less than R215 , the long term premium is R130, so the premium for Premium Waiver is R13. The remaining amount goes into the short term pocket.
(question / table on page 5 of workbook)
This table shows the contribution split for various monthly contribution amounts for 2-IN-ONE PLANS with the Premium Waiver option.
(question / table on page 6 of workbook)
There is a regular contribution fee which covers advice, the issuing of the policy, and on-going service and administration. The fee consists of 15% of the long term premium and a Rand amount of R10 for 2-IN-ONE SAVINGS 4 MY GOAL and 2-IN-ONE SAVINGS 4 EDUCATION, and it is deducted from the long term premium each month. The Rand portion of the fee is annually reviewable and will increase in line with inflation each year.
The investment and administration fee is 1.25% per year, and it is for the administration and maintenance of the Smoothed Bonus fund. The capital guarantee fee is 0.25% per year, and it is for providing the guarantees on the Long Term Pocket, and the fund management fee of 0.25% per year is for the management of the assets in the Smoothed Bonus fund. The investment and admin fee, capital guarantee fee, and fund management fee are all deducted from the long term investment returns before they are declared as bonus.
The fund management fee for the Short Term pocket is 0.57% per year, and it is charged for the management of the Money Market Unit Trust.
(workbook page 6)
On the 1st of July each year the annual contribution will increase. This increase will be applied to the total contribution, which means both the long term premium and the short term contribution will increase.
The increase will aim to be in line with inflation so that the buying power of customers’ savings will be maintained over time.
It is possible for customers to opt out of the contribution increase for a particular year if they notify Old Mutual in writing before 31 March that year.
(workbook page 7)
The short term contributions can be increased or decreased separately from the annual contribution increase. However, customers are not able to change their long term premium.
No changes are allowed before the first 12 contributions have been paid, but thereafter the short term contribution can be increased or decreased by amounts of R20 or more.
Only one change is allowed per calendar year.
Old Mutual will not charge a fee for changing the short term contribution, but there may be a fee from customers’ banks to change the debit order.
(workbook page 7)
Savings Top-ups are the additional savings that can be made into the Short Term Pocket. This is a good way for customers to save any extra cash , such as an employment bonus, stokvel payouts, or spare cash. The Savings Top-up will grow with short term interest and will be available for use when its needed most.
The minimum amount per Top-up is R250, and the maximum amount is R5000. These limits can be reviewed.
Savings Top-ups can be made any time after the first monthly contribution has been received, and there is no limit on the amount of Savings Top-ups that can be made in any year.
If a customer’s monthly contributions are all paid up to date or if they are currently taking a Premium Holiday, then any Savings Top-ups made at that time will be put straight into the Short Term Pocket.
However, if their monthly contributions are in arrears (and they are not taking a Premium Holiday), then any Savings Top-up that made will first be paid into the Long Term Pocket so as to make the long term savings contributions up to date, and then the remainder will be paid into the Short Term Pocket.
(workbook page 7 and 8)
In order to motivate customers to be disciplined in their long term savings and continue to pay their Long term premiums each month, Old Mutual will motivate them by paying additional money into the Long Term Pocket on their behalf.
After 24 premiums have been paid, an amount equal to the sum of the last 2 long term premiums received will be paid directly into the Long Term Pocket and will grow with the smoothed bonuses going forward.
Similarly after 60 and after 110 contributions the Savings Boosters will equal the sum of the last 3 and last 8 long term premiums respectively.
It is important to note that the Savings Boosters are added to the Long Term Pocket and are not paid out in cash.
(question on page 8 of the workbook)
Let’s look at an example in which the initial long term premium is R130 and the contributions increase by 6% each year.
After the 24th contribution has been received the first Savings Boosters will be paid into the Long Term Pocket. How much is the Savings Booster that will be injected into the Long Term Pocket? (Exercise is in the workbook.)
The amount of the Savings Boosters is the sum of the last 2 long term premiums, which is R275.60 in this case.
(question on page 8 of the workbook)
After the 60th contribution the Savings Boosters that will be paid will equal the last 3 long term premiums.
In this example the last 3 premiums add up to R492.37.
(question on page 8 of the workbook)
The final Savings Booster is paid after 110 contributions. In this example the annual contribution increase happened on the 109th premium. Therefore the Savings Boosters, which is equal to the sum of the last 8 long term premiums, is calculated as (6 x R207.20) + (2 x R219.63) = R1 682.47
(workbook page 14 and 15)
These are the top 5 risks that a customer takes when he/she purchases a 2-IN-ONE SAVINGS PLANS
(workbook page 8)
There are 2 types of premium holiday, namely Requested and Automatic.
The sum of the Requested Premium Holiday and the Automatic Premium Holiday cannot be more than 6 premiums over the term of the policy.
While the policy is on Premium Holiday, the customer can still withdrawal from and makes Savings Top-up to the Short Term Pocket.
(workbook page 10)
Withdrawals can be made from the Short Term Pocket any time after the first contribution has been received. The first 2 withdrawals from the Short Term Pocket during any calendar year will be free, and thereafter a fee of R50 will be charged for every additional withdrawal that year. There is no limit on the amount that can be withdrawn from the Short Term Pocket.
For the Long Term Pocket, part withdrawals are only allowed after the first 5 years and in 5 year intervals thereafter. There will be a part withdrawal charge deducted from the Long Term Pocket.
The minimum part withdrawal amount is R300. The withdrawal charge cannot be more than 30% of the Fund Value.
(workbook page 10)
The customer can withdraw their full balance from Short Term Pocket at any time, and can decrease their short term contribution to zero.
Even if the full Short Term Pocket has been withdrawn and the short term contributions have been decreased to zero, the short term pocket will remain active as long as the total monthly contributions are still being paid.
The customer can increase their short term contributions again in the next calendar year or any time thereafter.
If the customer surrenders the Long Term Pocket then the Short Term Pocket is also surrendered. A surrender charge will be deducted from the Long Term Pocket.
(workbook page 10 and 11)
If the customer stops paying their monthly contributions (and their Premium Holidays have all been used), or they specifically request it, their policy will be made paid-up. Paid-up means that contributions are no longer being paid, but the savings already made into the Long Term and Short Term Pocket remain invested until the end of your chosen term, death, disability or withdrawal of your money.
If the amount in the Long Term Pocket is less than R1000 and the customer requests to make the policy paid-up, it will be automatically surrendered instead.
The customer will continue to earn smoothed bonuses on your Long Term Pocket and interest on your Short Term Pocket when the policy is in paid-up state.
If the policy is made paid-up then the both the Long Term and the Short Term Pocket become paid-up.
If a policy is made paid-up a charge is deducted from the Long Term Pocket.
(workbook page 12)
A casual event charge is deducted form the Long Term Pocket when the customer makes a part withdrawal, makes their policy paid-up, or surrenders their policy.
The casual event charge consists of an administration charge of R300 and a variable charge that decreases over the policy term. If a policy is paid-up and the customer makes a surrender then the casual event charge is just an administration charge of R155.
The casual event charge cannot exceed 30% of the Long Term Pocket fund value.
(workbook page 12)
The reducing fee starts at 15% of the fund value at application date and reduces monthly over the charge term to 0%.
The charge term is half of the policy term, but at least 5 years and at most 10 years.
(question on page 12 in the workbook)
Let’s look at some examples (refer to workbook).
How long does it take for the reducing fee to reduce to 0% if the policy term is 10 years?
The variable charge starts as 15% of the Long Term Pocket fund value and decreases each month to 0% at the end of the charge term.
The charge term is equal to half of the policy term with a minimum of 5 years and a maximum of 10.
(question on page 12 in the workbook)
How long does it take for the reducing fee to reduce to 0% if the policy term is 20 years?
The variable charge starts as 15% of the Long Term Pocket fund value and decreases each month to 0% at the end of the charge term.
The charge term is equal to half of the policy term with a minimum of 5 years and a maximum of 10.
(question on page 12 in the workbook)
How long does it take for the reducing fee to reduce to 0% if the policy term is 30 years?
The variable charge starts as 15% of the Long Term Pocket fund value and decreases each month to 0% at the end of the charge term.
The charge term is equal to half of the policy term with a minimum of 5 years and a maximum of 10.
Since half of the term is 15 years, which is more than 10 years, so the charge term is 10 years.
Smoothing is a mechanism to protect the customer’s savings against the sharp ups and downs of the market while ensuring the savings aim to beat inflation over the longer term. Even in turbulent times, the smoothed bonus fund is expected to deliver positive returns for investors.
During periods of very good investment performance of the portfolio’s underlying investments, a portion of investment growth is not declared as a bonus. It is held back, so that in times of poor investment performance, there are funds available to declare a higher bonus than would otherwise not have been possible.
As you can see from the graph the savings value for the normal balanced fund experiences some sharp movements, whereas the Smoothed Bonus funds are always stable and increasing.
The smoothed bonus fund for 2-IN-ONE SAVINGS 4 RETIREMENT yields higher savings values over time due to the tax benefit on returns resulting in higher growth.
Over the long run the returns from a balanced fund are expected to be higher than inflation and the interest earned on a bank savings account, although this isn’t guaranteed.
(questions on page 13 in the workbook)
Answers:
Equities and Property
Bonds
Money Market
Foreign equities
(questions on page 13 in the workbook)
a. Moderate
b. The smoothed bonus, February
c. Long term premiums (after charges)
d. surrender, paid-up, full part-withdrawal
(questions on page 13 in the workbook)
The investment and administration fee is 1.25% per year, and it is for the administration and maintenance of the Smoothed Bonus fund. The capital guarantee fee is 0.25% per year, and it is for providing the guarantees on the Long Term Pocket, and the fund management fee of 0.25% per year is for the management of the assets in the Smoothed Bonus fund. The investment and admin fee, capital guarantee fee, and fund management fee are all deducted from the long term investment returns before they are declared as a smoothed bonus.
(questions on page 13 in the workbook)
a. Old Mutual Money Market
b. cash
c. Low
d. Interest
(questions on page 13 in the workbook)
Added
Interest
No Fee
No Fee
0.57% per year. The fund management fee for the Short Term pocket is 0.57% per year, and it is charged for the management of the Money Market Unit Trust.
(table on page 15 in the workbook)
(table on page 15 in the workbook)
Recap on unique features of current Retirement Plan.
If this benefit is R75 000 or larger, then the customer can only take one-third of the benefit as cash and the rest must be used to buy an annuity. An annuity is a retirement product which provides you with a monthly income when you are retired, similar to pension income.
So if the retirement payout is R150 000,
R50 000 can be taken as cash,
and the remaining R100 000 must be used to buy an annuity.
If the retirement benefit is smaller than R75 000, then the customer may take the full benefit as cash.
So for a R60 000 benefit the entire amount can be a cash payout.
The contributions paid to a customer’s RETIREMENT Plan are tax deductible under the current tax system. This means that their contributions reduce the amount of tax they pay, subject to certain limits.
All investment growth on their RETIREMENT Plan is not taxed. This means retirement savings grow by a higher rate than other 2-IN-ONE SAVINGS Plans.
The customer will also not pay tax on the portion of the retirement benefit that they take as cash if the amount is less than R330 000. Any cash amount above R330 000 will be taxed.
Court / maintenance order?
Ill health
Section 14 transfer
Surrender if paid-up value of all SARAF policies is <7000
