In this newsletter:
Benchtest 09.2012, a glimpse into upcoming strategic and other company developments, the second part of notes from the Africa Cup of Investments conference, suggestions with regard to new Namfisa reporting, increased SSC contributions, more discussion on regulation 29 and some interesting media clippings. and more...
Behavioural finance – some interesting observations
This will be continued in our next newsletter.
News from Namfisa
New quarterly reporting requirements – October Update
Namfisa recently issued a new template for future quarterly reporting by pension funds. This report comprises of a summary section, a signature section and 9 data sections. It makes reference to information to be provided by the Principal Officer, the asset manager and the administrator and attempts to separate sections according to the likely source of the information.
We suggest that funds coordinate with their service providers with regard to any areas in the template where they will require assistance and that they then liaise with Namfisa with the view to settle on a final version that can be compiled at the least possible cost to the fund, based on the contributions from their service providers.
Until such time as the template has been finalised, it would be premature for the contributors to this report to start developing and adapting systems and procedures for the purpose of this report. Follow this link to more specific recommendations…
Law and legal snippets
Social Security Act
The Villager reported on 17 October that the salary ceiling for the purposes of the MSD fund has been raised from N$ 6,000 to N$ 9,000. Since MSD benefit caps were already raised to N$ 9,000 (sick leave) and N$ 10,000 (maternity leave), an increase in contributions was to be expected. Read the report here...
Regulation 29 – where to from here?
The final draft of regulation 29 would currently require that every Unlisted Investment Manager (UIM) has to establish a Special Purpose Vehicle (SPV) through which the assets of its pension fund clients will have to be channelled into unlisted investments. This SPV has to be managed by the Unlisted Investment Manager (UIM) and the regulation goes to great lengths to install good governance principles in such a structure that is burdened with potential conflicts of interest.
Following are some of our main concerns with the proposed arrangement, considering that this is a new asset class presenting substantially higher risks than conventional publicly listed and controlled asset classes:
Interestingly, it was reported recently that the GIPF intends to invest 15% of its total assets of N$ 54 billion in unlisted investments. This is the equivalent to N$ 8 billion and is nearly 3 times the envisaged total of N$ 2.8 billion. The contribution of the balance of the industry will only be somewhere between N$ 450 million and N$900 million.
Interesting media snippets
Pros and cons of investing in a retirement fund vs. investing in a unit trust
In the Money Marketing newsletter of Media24, the author concludes that an investment in a retirement fund can generate as much as four times the capital of an investment in a unit trust, if the same amounts were invested in the same portfolio via these two vehicles, over a period of 25 years. Read the article here...
Don’t dismiss guaranteed annuities as the ugly duckling
In this article that appeared in Media24’s Money Marketing newsletter, Niel Fourie of the actuarial Society of South Africa explains why guaranteed annuities have their place in the market. Prospective retirees are well advised to read this article before finalising their retirement arrangement.
Don’t give up on active fund managers
A topical subject of regulators, media and in industry circles is active vs. passive investment management (index tacking). We also made reference to this in our review of the recent IMN Africa Cup of Investments conference. Taking the JSE Allshare Index as an example for index tracking and looking at our performance graphs for September 2012, it is shown that in all but the 1 year period, the average active manager has matched or outperformed this index. Of course this disguises the effect of asset allocation across different asset classes, but who would attend to that aspect in index tracking? In this article in the Wallstreet Journal Conrad de Aenlle makes a case for active management.
A South African woman has set a precedent with a sick note from a sangoma which was allowed by the court. Apparently she was being tormented by her ancestors. Read the article here...