In this newsletter:
Benchtest 04.2016, a generic communication policy, NAMFISA powers, vesting scales, industry meeting and more...
In future newsletters we will consider the following matters also identified by NAMFISA as frequently missing:
How far do the regulator’s powers stretch
As to the first question and with reference to the NAMFISA Act, advocate Heathcote concluded that NAMFISA does have the powers to supervise healthcare consultants.
So – what is wrong with vesting scales?
You will realize that we place a lot of emphasis on ‘real investment returns’ and on ‘income replacement ratios’ and you may ask, are the figures used in the table good, bad or indifferent? Firstly, if you invested in equity only, history as shown that you can expect a ‘real investment return’ in the long term of around 7%. Pension funds, however, are only allowed to invest a maximum of 75% in equity. So ‘real investment returns’ from a typical prudential balanced pension fund portfolio, should be around 5% in the long term. The table uses 5% as the maximum as more conservative portfolios are likely to achieve lower real returns in the long term. You will notice that the table does not produce an income replacement ratio of anywhere close to 100% for any of the scenarios. Internationally pension fund structures aim to achieve an income replacement ratio of 2% per year of service, i.e., if you worked and saved continuously for retirement for 40 years, a well structured fund should be able to offer you a pension equal to around 80% of your last salary before retirement. An income replacement ratio of 100% is therefore essentially unachievable.
If you missed the communication of NAMFISA circulating the minutes of the last pension funds industry meeting, download the minutes here...
News from the market
Once this information has been provided to the fund, the fund and its trustees will use their discretion to decide whether or not a benefit is withheld. The following factors must be considered;
Read the full article by Claire Densham Communications in Insurance Gateway, here...
Read the full article by Carl Roothman in Cover of 27 April 2016, here...
Read the article by Dr Travis Bradberry in Linkedin of 10 April 2016, here...