A contributory pension system, subsidised for poor South Africans, will impact both poverty and inequality, Parliament has heard – driving “forced savings” and helping people build assets that can be invested.
Speaking to Parliament’s Standing Committee on Finance (SCOF) on Tuesday, Marek Hanusch, a senior economist for the World Bank’s global practice for macroeconomics, shared the organisation’s proposed model to address poverty and inequality. The model is based on research in the World Bank’s book An incomplete transition: Overcoming the legacy of exclusion in South Africa, published in April 2018.
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South Africa has a pension fund pool of around R4 trillion. This is a significant collection of assets.
However, speaking at the Alexander Forbes Hot Topics Summit in Cape Town last week, the head of the Alexander Forbes Research Institute, Anne Cabot-Alletzhauser questioned whether this money is currently being used in the most optimal way.
“Our savings are the biggest potential driver of economic growth,” said Cabot-Alletzhauser. “How can you take that power and transform it into something even more significant?”
Currently, pension funds are invested predominantly in listed markets. There are two well-accepted reasons for this.
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In tough economic times like these, cashing out your pension fund when you change jobs may seem like a quick cash-flow fix but, in actual fact, it’s self-sabotage.
Cashing in your pension borrows from your future and sabotages your financial wellness in retirement, Jeanette Marais, the CEO of Momentum Investments, says.
Marais says when you withdraw from your retirement savings prematurely, you not only reduce the tax-free lump sum you will get when you retire, but you also increase the rate at which your retirement savings will be taxed.
Proceed to Source : Sowetan Live
Legalbrief Today recently commented as follows on a Business Day article:
Thousands of public sector workers over the age of 60 will be offered voluntary retrenchment as part of an effort by the government to cut its salary bill. A Business Day report says the decision to offer voluntary severance packages – the first such offer in 20 years – follows the conclusion of a new three-year wage agreement last week that bust the budget by about R30bn.
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A R7bn pension fund is at the heart of a legal challenge by the Association of Mineworkers and Construction Union (Amcu) against the world’s largest platinum miner, Anglo American Platinum (Amplats).
Not for the first time, Amcu — a relatively new union and one which has grown quickly on platinum and gold mines — has demanded the transfer of pension and provident funds established by companies in these sectors into the Igula Umbrella Provident Fund, which it set up.
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But the fund manager’s core business of SA pension fund portfolios is in structural decline
As the only large fund manager that is listed in its own right, Coronation Fund Managers subjects itself twice a year to the scrutiny of its peers.
Sometimes it ducks information it might like its investee companies to provide — for instance, it won’t tell you what the investment team is earning, only what CEO Anton Pillay and finance director John Snalam take home.
Proceed to Source : Business Live