NAMFISA levies

• Funds with year-end of May 2020 need to have submitted their 2nd levy returns and payments by 25 June 2020;
• Funds with year-end of November 2020 need to have submitted their 1st levy returns and payments by 25 June 2020;
• and Funds with year-end of June 2019 need to submit their final levy returns and payments by 30 June 2020.

• The due date for submission of individual income tax returns has been extended from the 30th of June to the 30th of September 2020. The extension only applies for the filing/submission of individual income tax returns and not for the payment of outstanding tax (which is still due on the 30th of June 2020). 
• The tax incentive programme regarding the use of ITAS, in the form of waiving penalties charged on tax accounts will also be extended to the 30th of September 2020. In order to qualify for this incentive programme, a taxpayer must meet the following requirements: 
  • Register on the ITAS portal as an e-filer; and
  • Update through online submission all tax accounts, for all tax types, in respect of tax returns that might be outstanding.
• Should the above requirements be met, automatic waiving of penalties will be done on any of the tax accounts. Taxpayers are therefore not required to complete an application form for penalties to be waived.

Pension fund governance - a toolbox for trustees

• Download the privacy policy here...
• Download a draft rule dealing with the appointment of the board of trustees here...
• Download the code of ethics policy here...
• Download the generic communication policy here...
• Download the generic risk management policy here...
• Download the generic conflict-of-interest policy here...
• Download the generic trustee performance appraisal form here…
• Download the generic investment policy here...
• Download the generic trustee code of conduct here...
• Download the unclaimed benefits policy here...
• Download the list of fund service providers duly registered by NAMFISA here... 
• Download the Principal Officer performance appraisal form here...
• Download the revised service provider self-assessment here...

Registered service providers
UPDATED May 2020

Certain pension fund service providers need to be registered by NAMFISA and need to report to NAMFISA regularly

These service providers are:-

• Registered Investment Managers
• Registered Stockbrokers
• Registered Linked Investment Service Providers
• Registered Unit Trust Management Companies
• Registered Unlisted Investment Managers
• Registered Special Purpose Vehicles
• Registered Long-term brokers
• Registered Long-term insurers

If you want to find out whether your service providers are registered, or whether you need to establish directly from NAMFISA because the service provider does not appear on the list, use this link...

Check out our retirement calculator

Our web based retirement and risk shortfall calculator has been enhanced and updated to assist you to determine how much you should contribute additionally, either by way of lump sum or regular salary based contribution, to get to your target income at retirement, death or disablement.

Try it out. Here is the link...



Dear reader

In this newsletter we address the following topics:

In ‘Important notes and reminders’, read about –

• NAMFISA levies
• Extension for individual income tax returns and tax incentives
• Unsuspension of laws suspended during lockdown
• NEF challenges the suspension of the Labour Act
• FIM Bill passes National Council

In ‘Tilman Friedrich’s industry forum’ we present:

• Chairperson affidavit is impractical and inappropriate
• After Corona the world will never be the same again!

In ‘News from RFS’ we draw attention to ‘Important administrative circulars issued by RFS’ since the previous newsletter.
In ‘News from the market place’ read about

• !Kharos Benefit Solutions – a new HR and payroll management company launched.
• !Kharos Benefit Solutions welcomes its first clients

In ‘News from NAMFISA’ read about:

• Consumer Credit Policy out for comment
• Suspension of requirement for chairperson affidavit
• Pension funds industry meeting postponed

In ‘Legal snippets’ read about –

• Retirement funds and Covid-19: legal perspective on tricky questions – Part 1
• Retirement funds – other interesting questions and answers – Part 2
• Can a death benefit be paid in instalments?

...make a point of reading what our clients say about us in the ‘Compliments’ section. It should give you a good appreciation of who and what we are!

As always, your comment is welcome, so open a new mail and drop us a note!

Regards

Tilman Friedrich
   


Monthly Review of Portfolio Performance
to 31 May 2020

In May 2020 the average prudential balanced portfolio returned 0.7% (April 2020: 8.3%). Top performer is Nam Coronation Balanced Plus Fund with 1.6%, while Allan Gray Balanced Fund with -0.5% takes the bottom spot. For the 3-month period, Stanlib Managed Balanced Fund takes the top spot, outperforming the ‘average’ by roughly 3.7%. On the other end of the scale Momentum Namibia Growth Balanced Fund underperformed the ‘average’ by 4.3%. Note that these returns are before (gross of) asset management fees.

The Monthly Review of Portfolio Performance to 31 May 2020 provides a full review of portfolio performances and other interesting analyses. Download it here...

Will equity markets take Corona in a stride?

Looking back at how global bourses have performed since the global financial crisis in 2007/ 2008, as depicted in graph 1 below, by 2014, all bourses had recovered the market slump resulting from the global financial crisis and since the only new one direction and that was up! This was of course up until Covid 19 struck and bourses plunged by around 20% from end of December 2019 to end of March 2020. At that point many investors went into panic mode and already saw the end of the world closing in on them. Tracking the bourse since then however, markets have recovered about half of the losses incurred up to the end of May and are on a good course June-to-date.

Graph 1


Read part 6 of the Monthly Review of Portfolio Performance to 31 May 2020 to find out what our investment views are. Download it here...

Chairperson affidavit is impractical and inappropriate

The requirement for the chairperson of the board to depose of the affidavit in the event of a rule amendment for reduction of benefits, may now temporarily be assigned by the board of trustees to the principal officer or any member of the board by means of a written resolution as per PI/PF/DIR/01/2020. Refer to News from NAMFISA below.
 
The reason for this temporary concession is ascribed to challenges posed by the state of emergency. From a practical point of view, however, such an affidavit often places the chairperson in a very difficult position. In cases where the chairperson, is independent of the fund sponsor and principal employer, has no insight in how the message of a reduction in benefits has been ‘properly communicated’ to the fund members. For employer sponsored funds the revised requirement helps as a trustee who has personally been exposed to or involved in the communication exercise should be comfortable disposing of the required affidavit.
 
For umbrella funds though, even the revised requirement will not change the predicament of a trustee or the principal officer when deposing of the required affidavit, unless he or she is coincidentally employed by the employer who intends to reduce benefits and therefor had personal exposure to the communication exercise of the employer.
 
I believe it is inappropriate to place any person in such a predicament which effectively cannot be resolved under the revised, temporarily effective requirements either. Instead, the principal officer should be able to rely on an affidavit by a duly authorised official of the employer.
 
After Corona the world will never be the same again!

Every politician, every news medium, and of course Bill Gates, are all heralding that the world we knew before will never be the same again, after Corona. The abbreviations A.C. and B.C. have been given a new meaning – After Corona and Before Corona. Have you noticed that this message is driven in particular by ITC companies and others, clearly wanting to capitalise on IT to promote their business?

In the 20 years or so B.C. we experienced a huge tidal wave of human movement across the world. One may probably differentiate between business movement and leisure movement. I believe these two will respond differently in the years A.C.
Maybe me, as a ‘baby boomer’, am still of the old school. I believe human beings are social animals. They like to socialise, meet face to face and interact on a personal level and have that feel-, smell-, taste experience, simply being a human being. We do not want to be prescribed to the nth degree what we may do, what we may not do, where we may and may not be, how and when we may move around – like an animal in a zoo. We may live being shackled for a while, but we will not, as a species accept shackles for any extended period and the longer we are shackled down, the more violent the breaking of these shackles will eventually be. This is what history tells us. The virtual world may add a facet to our lives but it will not change our human genes. I am convinced that the new reality A.C. is a huge hype blown up by people with a vested interest and opportunists joining the band wagon.
 
People who have been moving around for business reasons probably never experienced such travelling as fun, and it was time consuming, disruptive, inefficient and expensive, to the consumer in the final analysis. Did they have to move around? Probably not but the world had not cottoned up to the new way of doing business simply because there was no real imperative to do so. In the interregnum, (i.e. the various stages of lockdown), us all had to accept the other person doing things differently and us being forced to also start doing things differently. We were all forced to start using technology to avoid prohibited movement while still keeping the business fires burning.
 
Just think of your staff training and your personal continuing professional education obligations. So many businesses out there are nowadays obliged to spend x amount on training and x hours on continuing professional education and if this is all one wants to achieve then I guess the virtual event will do it for you. It will be a lot cheaper, a lot more accessible, efficient, practical and much less disruptive. Not driving to and from the airport, sitting in the departure hall, flying across the world, booking into a hotel to attend the conference or seminar starting 8h00 tomorrow morning, and all of this in reverse upon return.
 
This type of movement undoubtedly will shrink dramatically. It’s been wasteful of natural resources and it is good for us all and our environment for this to largely disappear! So much as the demand for training and CPE, much to my personal dismay, was blown up artificially, this bubble has burst never to return again. The need for training however, will remain and this will largely be served with the assistance of IT. ITC businesses and those that provide virtual training will thus experience a quantum leap.
 
However, when it comes to human movement for leisure and entertainment, I doubt we will see a dramatic change. Just think of that gala event. That special, memorable event will always be a personal, live experience rather than the virtual experience. Think of the personal, live experience of being exposed to another country, another people, other traditions and cultures another climate and environment. That travel fever, that travel bug cannot be emulated by virtual deception, it has to be ‘the real thing!
 
We will see a line drawn between ‘must have’ where price, efficiency and practicality will be essential, and ‘nice to have’, where those considerations are not important but rather the live experience where feel good, atmosphere etc will be important. The former will rely on the human element ever less, the latter ever more.
 
Accordingly, we will see a lot of spare capacity and dead capital where ever business relied on business movement. Business that has been focusing on movement for leisure and entertainment purposes is likely to return to, and substantially exceed the B.C. business levels A.C., but it will take time. The demands of this type of movement will increase exponentially and the opportunities arising out of the increasing demands will be huge. During the interregnum, however, many people will have lost their job, many will have experienced a sharp decline in income and all are now in a state of shock. Everyone will try to rebuild their lives, their confidence and their reserves, before they will think about spending money on leisure and entertainment again.
 
You may ask what this has to do with pension funds? The main business of pension funds is investment. So, pension fund trustees must be alert and ascertain that their asset managers are on the right track because failing to find the right track will cost fund members dearly!

Conclusion

The world after Corona will be different and it will take a long time for all systems and processes to adapt to the new reality. It will be a huge shake-up of all we had before and there will be a large fall-out. It will be like the aftermath of a global war, probably with as much destruction in every respect as a war typically causes. At the same time new products and services will be created. Businesses serving commerce and industry will become much more IT driven while businesses serving personal leisure and entertainment will become much more focussed on personal needs and preferences rather than ‘one size fits all’. In this transition there will be lots of failures and lots of shining successes. There will be lots of volatility in global financial markets as the processes and procedures of new products and services are being calibrated to avoid mistakes and to improve and expand on success formulas.

For an investor the transition will be a difficult time as there will be lots of tears of joy and pain. At the end of the day real business is the asset class to invest in. We all have to live, eat, drink, dress, get to work, nurture our health, go on holiday, learn, find shelter and so on. The ‘real economy’ will continue and is best represented by commerce and industry, in short, investment in equity appears to be really the most appropriate asset class for the normal investor who shies away from the more exotic asset classes such as gold, works of art etc.

We remain with our previously expressed view that one should not sell out of equities but should selectively dispose of holdings that are clearly in the wrong industry to replace them with ones that are clearly in the right industry as we have alluded to above. One can expand one’s holdings in the right sectors provided one is assured of the sustainability of the specific holding A.C., which of course will prove to be quite a gamble.

Index investing will merely result in returns mirroring the general performance of the economy and that will be worse than it has been before the lockdown during the transition from the world B.C. to the world A.C. Stock picking will add value, if the shrewd manager avoids companies likely to suffer and pounces on opportunities that will become available. In these times of high volatility, one should mitigate the risk by spreading one’s investment over a period.

The Rand still being badly under-valued by our measures, while foreign equity markets have already picked up substantially, the prospect being for global equity markets catching their own Corona as the widespread impact of the global lockdown measures manifest in global economies and for the Rand to reverting to fair value, there is still a significant opportunity to repatriate foreign investments at this stage.

Compliment from the auditors of a pension fund
Dated 27 May 2020

“...We would like to thank you and your team for all your assistance last week, it truly helped us in getting our work done and finishing on time.
 
I have discussed with the team and below is our experience with regards to the 2020 audit.
 
Upon our arrival, we immediately received all documents and got straight to work. It was highly unlikely that the samples selected were not provided to us as the client ensured we had everything we need. This was of great assistance due to the number of files we had to test. In the event that a certain file was not in our belonging, the client would inform us of this beforehand as the file was with them due to admin reasons. When a new sample was selected, without any delay, we received all relevant supporting documents hence no long waiting period.
 
The staff was at all time friendly to us and assisted us in every query, no matter how small. This helped us understand the business better and get our work done faster than expected.
 
The files presented to us for testing were neatly presented with all necessary information.
 
This resulted in a smooth and well organized audit...”

Read more comments from our clients, here...



Important administrative circulars issued by RFS

RFS issued the following fund administration related circulars to its clients over the last four months. Should any client have missed any of these circulars, please get in touch with your client manager:

1.  Confirmation of registered service providers (RFS 2020.05-10).

• Gideon Cornelissen, CA (Nam/SA), former CFO and head of strategy at Firstrand Namibia; director of Logos Investments (Pty) Ltd
• Renier van Rooyen, CA (Nam), former CFO at DBN and head of the technical advisory team to the Minister of Public Enterprises; director of Logos Investments (Pty) Ltd
• Tilman Friedrich, CA (SA/Nam), former MD of Retirement Fund Solutions; director Retirement Fund Solutions Namibia (Pty) Ltd
• Louis Theron, B Econ, Bus Adm (Hons), HED, associate director support services, Retirement Fund Solutions Namibia (Pty) Ltd 

• Retirement Fund Solutions (Pty) Ltd
• Bidvest Namibia Information Technology (Pty) Ltd

Consumer Credit Policy out for comment
 
NAMFISA circulated a new Consumer Credit Policy for comments on or before 31 July.
 
The ‘Executive Summary’ of the policy explains the purpose of the envisaged consolidated consumer credit legislation as follows “The regulatory and supervisory framework on contracts covering credit in Namibia is characterized by lack of a robust legislation that is effective in protecting consumers of credit against unfair market conduct. This is because the only credit extension subjected to market conduct supervision, although not with broad-based consumer protection principles is one extended by the banking and microlending institutions. Moreover, credit extended by these institutions is regulated through separate Acts, namely the Credit Agreements Act, 1980 (Act No.75 of 1980), the Usury Act, 1968 (Act No.73 of 1968), the Banking Institutions Act, 1998 (Act No. 2 of 1998) and Microlending Act, 2018 (Act No. 7 of 2018). On the contrary, credit extended by retailers, for example, is not supervised against unfair market conduct, although it is also a financial service instrument, resulting in fragmented regulation and supervision of consumer credit. 
 
In recent years, a shallow and narrow scope of consumer protection on market conduct in the financial sector has stimulated a debate among public policy makers. The debate focused on a need for a broad-based financial consumer protection drive in the country. In this respect, the Minister of Finance under whom the Policy and subsequent Act will fall tasked the two financial sector regulators, (NAMFISA and Bank of Namibia) to enhance supervisory and regulatory oversight functions on credit agreements with natural and juristic persons. The gravity of the problem is amplified by the already high and increasing levels of household debt averaging above 85 percent of disposable income between 2013 and 2018, caused amongst others, by the poor business market conduct such as inadequate due diligence on affordability assessments...” 
 
Suspension of requirement for chairperson affidavit
 
NAMFISA issued PF/PI/DIR/01/2020 “Suspension of Part of Paragraph 5.1 of Directive PI/PF/DIR/05/2015” on 4 June 2020.
 
The requirement that the principal officer of a fund must submit a signed affidavit by the chairperson of the board together with an application for registration of a rule amendment that may negatively affect members’ benefits (e.g. reduction of contributions) as per PI/PF/DIR/05/2015 is temporarily suspended. Instead, the board may by written resolution delegate the authority to attest such affidavit to the principal officer or any member of the board as per amended prescribed form.
 

1. Question: Umbrella funds – suspension or reduction of contributions: if the general rules are amended to allow for employers to suspend or amend contributions (due the effects of the pandemic), do special rules have to be amended as well? 
   
   The PLA has confirmed my views on umbrella fund amendments. In formulating his opinion, Jonathan Mort has also consulted the FSCA and the only reason why the FSCA wanted the special rules for each employer to be amended as well was simply for data gathering and monitoring purposes. However, as there is no legal requirement or this and there are other means for the FSCA to gather data and monitor employers, it seems that the FSCA will no longer insist on this double amendment system.
   
   I have also always maintained that reducing contributions by redefining/reducing pensionable salary has too many other negative implications for it to be a viable solution.
   
   Please note that in Namibia, there is no legislation that provides a general exemption from the Pension Funds Act (PFA) requirements as is the case in SA. The only exemptions that NAMFISA can currently grant are those under sections 2, 17, 19(4) and 19(6). If NAMFISA wants to be able to exempt employers from their contribution obligations under S 13A for the duration of Covid-19, NAMFISA will have to request the President/cabinet of Namibia, through its line Ministry, to suspend the operation of s 13A of the PFA in terms of the emergency powers granted to the President and/or cabinet under the Constitution and the laws governing the State of emergency.
   
   Please note that an employer cannot be given Covid-19 contribution relief for contributions that are already in arrears.
   
   We do not have prescribed minimum benefit requirements in Namibia and there is no legal prohibition on requiring members to fund costs and risk benefits or a portion thereof. As long as the registered rules provide for costs to be recovered from Member’s Fund Credits, this is entirely legal.  Please also note Graham Damant’s views on s 37A and 37D. (NAMFISA’s should take note!)
   
   The issue of deducting risk premiums for employer-owned policies won’t arise in Namibia because funds are not allowed to serve as a conduit for these employer premiums.
   
   While the FSCA appears to fully grasp that distressed employers are trying to at least keep risk benefits in force at pre-Covid-19 levels, even if they can’t pay full salaries or fund retirement savings, NAMFISA seems determined to force employers into an “all or nothing” situation, where if an employer cannot fully pay pension fund contributions, they must withdraw from their retirement fund in order to avoid breaking the law. (Note of the editor: NAMIFSA has subsequently issue Circular 2 of 2020 setting out the alternatives available to employers for suspending or reducing contributions and the conditions that must be met by employers before such suspension or reduction can be implemented.)

1. Question: I remember from my years of CFP studies that the requirement was for rules to make it possible to determine a benefit but not necessarily specify the benefit. So even if one would need to refer to another record such as a risk policy or trustee decision it should still be in order. In a DB environment this makes a lot of sense where one often has to refer to employment records. To me one question is – if rules define the process for trustees to set the contribution rate in my understanding this should be consistent with pensions law as long as there is a record of the trustee decision. 
   Answer: Agreed. In fact, the Pension Funds Act does not even mention that contributions must be specified in the Rules. If the Rules authorise the Trustees to determine the contribution parameters (and many rules provide for payment holidays and extra payments) and one can easily see what the contribution is or has been, then NAMFISA does not have to approve the contribution rate. NAMFISA cannot decide how much a Participating Employer (PE) must pay. It is odd that NAMFISA does not insist on approving additional contributions by PE’s. I see it like this, if the Rules provide a facility for a contribution holiday, in much the same way as providing a housing loan facility, then surely we don’t need a Rule amendment every time someone uses the facility, as long as we have documentary evidence somewhere to back up what was done.  
    
2. Question: Seeing that Namibia has not changed the Pension Funds Act (PFA) as SA did to require of the regulator to consult not only the PFA but any other law in assessing whether a rule amendment is consistent with the law, can NAMFISA usurp such powers, i.e. did the SA regulator have such powers even before the change in the PFA? (A specific challenge we now have the type of benefit a provident fund provides where NAMFISA is now usurping the powers of Inland Revenue.) 
   Answer: If memory serves me correctly, the Financial Services Conduct Authority (FSCA) did not have this power before the PFA was changed. They changed the Act because the FSCA lost a court case, i.e. the court ruled that the FSCA must confine itself to the PFA. Then on appeal, the Court overturned this and said that the FSCA must consider all laws. It may well be worth getting an opinion on the exact extent of NAMFISA’s mandate/powers. They want to be able to regulate every single matter pertaining to NBFI’s but this is simply not plausible or correct because when you apply to NAMFISA for approval, it is in their capacity as Registrar of Pension Funds, not as custodian of every law.
    
3. Question: What was the situation in SA prior to the change of S37C that now makes specific provision for the section to only apply to lump sum benefits? 
   Answer: In SA, to the best of my knowledge, it was always understood that s 37C applied only to lump sums by the entire industry, even the regulator. The PFA rulings that codified this were not because the FSCA had tried to apply s 37 to pensions, but rather because beneficiaries were unhappy with allocations made by the Trustees under s 37C. In seeking to explain how s 37C works in order to apply it to the various cases before the PFA, the PFA essentially made what had always been trade usage into case law. NAMFISA’s big error has been in trying to extend the definition of “member” to all beneficiaries, when clearly “member” is a person who acquires membership through employment or joining an RAF and paying premiums and such a person once they retire and become a pensioner. It is legally untenable to extend membership to everyone else who receives a benefit from a fund. 

Can a death benefit be paid in instalments?

In last month’s Benchtest newsletter we cited expert opinion on whether a lump sum death benefit can or must be paid within 12 months of the death of the pension fund member.

The article clarifies that a debt (in this case a death benefit due) becomes due when the duty to pay arises. Where a debtor’s liability is dependent upon the performance of certain conditions, the debtor will not be in mora until a duty to pay arises, e.g. all dependants of a deceased needed to be and then have been determined.

Mora can arise where the debtor’s need is urgent and the creditor’s delay is unreasonable. The common belief that a fund’s duty to pay is contingent upon the expiry of the 12-month period referred to in Section 37c is not correct. The duty to pay is not dependent on this but rather whether the trustees are satisfied that they have investigated and considered with due diligence and are in a position to make a decision.

Although onerous, most trustees are familiar with the process they need to follow when faced with the disposition of a benefit due in respect of a deceased member. Section 37C (2) then stipulates that “...the payment...shall be deemed to include a payment made by the fund to a trustee contemplated in the Trustee Moneys Protection Act...for the benefit of a dependant...”

Section 37C thus makes no prescription as to the manner of payment but only explicitly allows for payment to a trust. As stated above the obligation of a fund making payment arises upon the fund being ‘in mora’ towards a dependant. This means that either all dependants have been identified or a dependant’s needs are urgent and a delay would be unreasonable.

In practice trustees often believe that they have identified all dependants, but cannot be certain. This is particularly relevant in case of a deceased male member where one can mostly not be certain. In such cases the trustees have to be cognisant that dependants can still appear to lay claim on sharing in a benefit until expiry of the 12 month period following date of death of the member.

In such a case the trustees need to assess the needs of those dependants they have identified. Should there be an urgent need, mora arises and the fund is obliged to pay.

Since the quantum of the benefit due to the dependant in urgent need can only be determined upon expiry of the 12 month period following date of death of the member, in my opinion the only manner in which the trustees can reasonably meet their obligation is to make one or more interim payments to the dependants of a portion of the full benefit that would be allocated to him or her in the event of no other dependants being identified subsequently and up to expiry of the 12 month period.



The R400 bn decline in pension funds’ assets affect SA household wealth
 
“...Momentum researcher Johann van Tonder said the decline was 52.5 percent more than the previous largest quarterly fall during the 2008 Great Recession.

“The recent plummet in household real net wealth - from an estimated R7,043.6 bn in the fourth quarter of 2019 to R6215.4bn in the first quarter of 2020 - can be largely attributed to a sharp decline in the real value of households’ pension funds and other investments such as unit trusts,” Van Tonder said.

“The real value of pension funds declined by an estimated R427.6bn over the quarter, while other investments lost value of R363.9bn.”

Van Tonder said the negative impact of the Covid-19, the subsequent countrywide lockdown, and South Africa losing its last investment grade credit rating at the end of March contributed to the decline...

The South African Reserve Bank last week cut the repo rate by a further 0.5 percent to shore up the economy, bringing the total 2020 interest rate cuts to date to 2.75percent.

Anchor Capital’s Nolan Wapenaar said investors earning a 7 percent return on their 32-day notice accounts saw their income plummet to 4.25percent in January on that same investment today.

Wapenaar said the latest repo rate cuts would do little for longer-term bonds than short-term interest rates.

He said the coronavirus lockdown implemented in many countries incapacitated economies, as little production was possible.

“Apart from the immediate negative effect on the prices of shares and bonds, the future impact of these decisions will be devastating for economies and households - as company profits will decline, while millions of households are expected to lose their income due to extensive employment losses across the economy, negatively affecting their ability to live properly and save for retirement and other goals,” he said.”

Read the full article Siph0lele Dludia  in IOL of 26 May 2020, here...
 
Alternative ways to structure a pension
 
The best way to overcome the disadvantages of living annuities and guaranteed annuities is to use both. This becomes even more important with Covid-19 and the downgrading of South Africa’s credit rating. The big difference between the two generic types of pensions (annuities) is: with a guaranteed pension, you take no risk, but with an investment-linked living annuity (living annuity) you take all the risk.

There are advantages and disadvantages to both.
 
Read the full article by Bruce Cameron in Business Maverick here...



Dlamini-Zuma told to amend invalid lockdown regulations
 
“...The judgment comes as a result of an urgent application brought before the court last week by Reyno De Beer, an association called Liberty Fighters Network and the non-profit Hola Bon Renaissance Foundation. 
 
In their application, the trio asked the court to declare the national state of disaster and the regulations promulgated by the minister unconstitutional, unlawful and invalid. 
 
They asked that the court declare gatherings lawful and that all businesses, services and shops be allowed to operate as long as they implement the necessary precautionary measures, such as wearing masks and using sanitisers. 
 
The applicants argued that the use of the DMA to respond to the pandemic was “irrational” and the state should have sought to use other existing legislation such as the International Health Regulations Act to deal with the disaster. 
 
Judge Norman Davis ruled that, given the worldwide spread of the virus, the lack of a vaccine or effective treatment – including the need to urgently capacitate the county’s weakened public healthcare system to allow it to cope with a large influx of patients – he could not declare that government’s decision to use the DMA was irrational. 
 
He did, however, find that a number of regulations in Level 3 and Level 4 promulgated by the minister fail the test of rationality, in as far as they are connected to the stated objective of preventing the spread of infection....”
 
Read the full article by Tebogo Tshwane in Moneyweb of 3 June 2020, here...
 
Mediclinic in SA has not admitted many Corona virus patients
 
Mediclinic International, the third-largest private hospital in southern Africa in terms of hospital beds, says it has not had to admit that many coronavirus patients and its intensive care units in South Africa are largely occupied by people brought in for other emergencies. "There's a lot of talk going around regarding Covid-19, but we don't have that many Covid-19 patients, even within this wave we are currently in," said Mediclinic International CEO, Dr Ronnie van der Merwe on Tuesday, during the presentation of the group's financial results for the year ended on 31 March. The number of people who have tested positive for Covid-19 in SA increased to35,812 on Tuesday, while the number of deaths stood at 705 on Monday evening. The department of health did not yet have the number of deaths reported in the past 24 hours. - Fin24, (from IJG Daily 030620)
 
FirstRand customers’ average income plummets by 20% during lockdown
 
The average income of First National Bank (FNB) customers plummeted by about 20% during the nation’s lockdown as people took pay cuts or had less work. FirstRand’s retail banking unit also experienced a “major drop-off” in transactional activity and credit-card spending as businesses closed and people stayed at home, FNB’s retail banking head Raj Makanjee said on a call with reporters on Tuesday. Credit growth suffered as South Africans opted to save, he said. The slump in business is in line with guidance from other SA lenders that earnings for the first half of the year will probably decline by at least 20% as measures to curb the pandemic take their toll on customers’ finances. Unlike its main competitors, FirstRand reports annual results through June. Banks have all extended relief to clients to help shore up their cash flows, including payment holidays and emergency loans. SA moved to alert level 3 from 1 June after being at level 4 for a month. - Business Day (from IJG Daily 030620)
 
An apology to the young
 
“The world is in an economic crisis due to a virus – and, more likely, because half the world was locked down for between three weeks and more than two months. Our politicians loved their new role. They came out in front of the cameras and paraded their science. In general, they were all over the place and, having lockdown-related businesses, they thought they would save them by spending our grandchildren’s future.
 
The rich world issued $17 trillion in debt in a matter of months... So, the rich are adding 27% to the debt-to-GDP ratio within two quarters, and the developing countries around 12%. This is debt issued in under one year in most cases. Governments in many cases will not be able to stop. The politicians have been able to raid the future.

The world is basically adding $2 400 debt to every man, woman and child when the actual average GDP per capita is about $11 400 per person. This, with $8 000 in government debt to pay off already....
 
And the fear social media and governments themselves have created around a million deaths is absurd. Yes, it is, since we have now learned that we will not lose that many fewer lives due to these interventions. We will only flatten the curve, which means the deaths will happen but over months rather than weeks...Covid-19 is mean, but it has not killed many young people and not too many working-age people...It has killed fewer working age folk than the normal flu. Yes, it has a lower mortality rate than the typical flu. Even in South Africa the flu kills about 20 000 people every year, mostly older – but more evenly spread among age groups than Covid-19...
 
Yet it is this working age group that is going to see more than 200 million people become unemployed in the world...Real leaders may have started a lockdown, but would have concentrated on getting the health system ready and gathered facts. In fact, they would have listened to the scientists and noted that they said months ago the need for the lockdown is over.
 
But politicians have overplayed their hand. Not just in SA, but all over the world. They did not want to listen, or felt trapped and that they had to keep up the act and pretence of ‘knowing’. They showed their egomaniacal side and destroyed much of the world economy instead of focusing on the need to get economies going and children back to school while protecting the old...
 
The coronavirus crisis is about to give way to the biggest debt crisis and unemployment crisis ever. Bigger than the 1920 Spanish flu and bigger than the global financial crisis of 2008.

We have let our children and grandchildren down...”
 


Great quotes have an incredible ability to put things in perspective.

"There is nothing in which people more betray their character than in what they laugh at."
~ Johan Wolfgang von Goethe