First Quarter 2015 – In Touch

Our annual Jurgens conference took place in Magaliesburg this year which was most enjoyable and a great motivational, team- building experience.

A question I am often asked is “How safe is your unit trust money?”

In a nutshell, to invest in unit trusts, your investment is regulated by law. Although these regulations cannot protect investors against market corrections or crashes, there are key role players put in place, making it very difficult for any one of the parties to disappear with your money.

The key role players are:

The Trustee is an independent Bank or financial institution appointed by the unit trust management company to safeguard the assets of the unit trust. The manager and trustee set up a unit trust together. The Trustee ensures the fund is managed according to the rules of the mandate and the Collective Investment Schemes Control Act.

The Financial Services Board (FSB) is the regulator of the unit trust industry and issues a licence to approved unit trust fund managers. The FSB has the power to request audits and the manager needs to submit regular reports to the FSB.

The Collective Investment Schemes Control Act (CISCA) regulates the way in which a unit trust should be managed and what information needs to be disclosed to investors. CISCA also limits exposure to any one holding or certain asset classes. The potential for your investment to be affected by fraud is thus curbed substantially when investing in unit trusts. If a company in which you are invested fails to adhere to any of the legislated regulations, this will have a limited impact on your total investment.

(Courtesy: Sanlam Investments, News and Insights)

Regards

Mark


Employee Benefits from Estelle Susanna

Tax changes that will have an impact on disability income policies effective 1 March 2015

A reminder : Effective 1 March 2012, all unapproved risk contributions are to be taxed as a Fringe Benefit in the hands of the employee.

The Income Disability contribution was then tax deductible by the employee, making the contribution tax neutral. The Income Disability benefit received was taxed.

With effect from 1 March 2015, the Income Disability contribution will continue to be taxed as a Fringe benefit and the employee cannot claim back the tax. All Income Disability, either new or existing claims, will be paid out tax free. This applies to Employee Benefits and privately owned Income Disability policies.


Inflation and the oil price from Chris Botha

Inflation slowed to its lowest rate since April 2011 at 4.4% in January compared to a year ago, as lower fuel prices and slower increases in food inflation offered relief.

The inflation data supports the case for stable interest rates for at least the next few months, which will offer over indebted consumers some respite.

The 4.4% also means inflation began the year well within the 3%-6% target band.

The Reserve Bank said in January it expected inflation to remain within the band.

Oil prices reached $115 a barrel in the middle of last year and fell to about $45 later in the year and in January, to about $62 a barrel.

Food inflation will play a role in how inflation performs in future. Annual food inflation moderated from 7.4% in December last year to 6.6% in January 2015.

Courtesy: Business Day


Short Term News from Greg Brits

The effects of load shedding has brought about more and varied claims for the insurance industry.
Consumers are encouraged to remain vigilant in order to ensure that resulting claims will be covered by their insurance policies. Load shedding has become part of our daily lives and may be so for at least the next 3 to 5 years.

Where insurance cover is subject to a burglar alarm warranty, and the alarm fails due to load shedding, should a loss occur during that load shedding period, the insurers have advised that they will deal with each case on its own merits.

If an alarm failure was solely due to load shedding, a client will not be prejudiced by that failure which is beyond their control. It is, however, expected that the insured will at all times act in a reasonable manner by ensuring that the alarm is activated and that the alarm back-up battery systems are fully functional and tested regularly.

To help our clients understand and protect themselves from risks that involves load shedding, the following precautionary measures should be followed:

  • Check and replace old batteries of alarm systems, electric gates etc to ensure that they are functioning and are able to sustain the power source during periods of load shedding.
  • Arm your alarm if you leave your residence, even if load shedding is expected. Should it malfunction during load shedding, you may have to prove that your alarm was in good working order at the time you left your premises for the insurer to consider your claim.
  • Switch off and disconnect all electrical appliances when load shedding occurs or when leaving the premises. This will avoid power surge damage when power is restored (except for fridges, of course).
  • Where possible, install a power surge protector to reduce the risk of damage to electrical appliances and DB boards.
  • Should you install a generator, please ensure that it is installed by a qualified electrician and that the relevant and compliant change over switches are used.
  • Connecting a generator direct to a plug point could have disastrous consequences, one being a fire hazard! This type of claim will usually be rejected by the insurer.
  • Power Surge cover is usually limited to a certain amount on insurance policies.
  • The risk of burglaries and armed robberies are higher during load shedding, be vigilant and keep security gates locked.

In terms of alarm warranties and how your insurer will handle a claim due to load shedding, please contact our office.

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