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Issue 1/2008
Protekt&Preserve
A newsletter for members of the Protektor Preservation Fund
Your Annual
Benefit Statement
– helping you plan for the future
Annual Benefit Statements from Protektor are in
the process of being distributed. Although many
members would probably not give it a second
glance, we encourage you to study it carefully,
because it contains valuable information that
could affect your future financial wellbeing. NEWSFLASHES
Your statement shows the value of your Accumulated The Financial Services Laws General Amendment Act
Credit as at 30 June 2008 and gives information on invest- of 2008 has been published by the Minister of Finance
ment returns earned. It also tells you at what age you can in the Government Gazette. It clarifies the execution
retire from the Fund and what benefits are payable if you of divorce orders and the tax implications of lump
die or become disabled (also called ill-health retirement). sum payments from retirement funds in settlement
When you read your statement, you should think about of divorce orders.
the following:
Divorce orders
Are your benefits enough to meet your needs? Consider From 1 November 2008, retirement funds must make
the benefit payable by Protektor within the context of your payment in respect of valid divorce orders. This applies
wider financial planning. Will you have enough savings at to all divorce orders received by retirement funds. It
retirement? If not, you may need to discuss additional re- is important to note that it is the responsibility of the
tirement funding options with your financial adviser. non-member spouse to initiate the claim process by
Will any of the information affect your retirement contacting the relevant retirement fund and making a
strategy? This may be a good time to make an appoint- payment election.
ment with your financial adviser. He/she can take your
latest projections into account as they relate to your retire- Tax
ment funding strategy. A divorce order award that is payable to a non-mem-
ber spouse will be deemed to accrue to the member on
the date that it is deducted from the member’s value
Bonus declaration in the fund. The non-member will be paid the amount
The Trustees have approved a final interest rate stipulated in the court order and the tax will be paid
declaration for the year ended 30 June 2008 of 13.6% by the fund from the member’s remaining fund value.
for members invested in the Guaranteed option. The member may recover the tax paid from the non-
member spouse.
The declaration is made up of a distribution of nett
investment return of 12.2% (i.e. Guaranteed Fund
bonus less investment fees) and an allocation of surplus
The Fund’s financial statements and annual report will
of 1.4% of individual account values.
be posted on the Protektor website at
www.oldmutual.co.za/protektor by 31 December 2008.
Contact us!
Service Centre: 0860 20 30 40
Fax number: 021 504 9384
Email: rfamembers@oldmutual.com
Website: www.oldmutual.co.za/protektor
Postal address: Protektor, PO Box 1, Mutualpark, 7451
Service hours: 08h00 to 17h00
Licensed Financial Services Provider
Please
complete
and return the
beneficiary nomi-
Beneficiary nomination nation form which
we have included
do’s and don’ts
with your benefit
statement.
No one wants unnecessary financial hardship
for their loved ones when they die - which is why
you should do everything you can to ensure that
your death benefit can be processed as smoothly
and swiftly as possible. Read on to see how you
should go about nominating beneficiaries for
your benefit.
do’s
& don’ts
Ensure that your beneficiary nomination form is Don’t think ‘I’ll do it later’. If you don’t update your
always up to date. If you marry, have children, get nomination form and something happens to you, your
divorced, lose a loved one, or your circumstances dependants may have to wait much longer before the
change in any way which may affect how your death benefit is paid.
benefit is paid out, you must update your
nomination form.
Ensure that all your dependants are listed – read more Don’t exclude dependants whom you may not wish to
on the next page to understand who qualifies as your leave anything to. Even though your relationship with
dependants, as these may not only be your immediate someone may not be good, if that person depends on
family members. you for any financial help, he or she should appear on
your nomination form.
Give additional information and motivation to help Don’t leave out any relevant information – be as
the Trustees decide how to divide your benefit. complete as possible. State the relationship that you
have to nominated beneficiaries, for example niece,
Explain why there are specific reasons for some de-
nephew, a financially dependent friend, etc. The more
pendants to have more of your benefit allocated to
information, the more helpful it is for the Trustees.
them than others. For example, a disabled child may
require more than a healthy child.
Ensure that the nomination form indicates an exact Don’t submit an incomplete form – take care to supply
percentage split of the benefit for each beneficiary all the information required, as incomplete forms may
and that the total percentage equals 100. Without this, be invalid. Don’t be coerced by opportunity seekers.
the form may be ruled invalid by the Trustees. Exercise your own judgement.
Important information to Before the Trustees can pay
out a death benefit, they have
share with your family to conduct a thorough investi-
gation to determine who your
When a member of the Fund dies, the Trustees have to follow a closely dependants are and to demon-
regulated process to ensure that the benefit due to beneficiaries is fairly strate that they have split the
allocated. They rely on information contained in various documents benefit equitably. This process
to assist them in making this decision. One of these documents is takes time.
an affidavit*.
It is critical that an affidavit is as complete as possible, particularly with
regard to the financial dependency of the claimant at the time of the *An affidavit is a formal, sworn statement
member’s death. An affidavit should contain the following information: of fact, signed by the person who made
the statement, and witnessed by a com-
The relationship to the deceased at the time of death; missioner of oaths, such as a lawyer,
policeman, etc.
The extent of the financial dependency on the deceased, for example,
and the amount and nature of the expenses covered by the deceased; It is important to note that all infor-
mation contained in an affidavit must
The claimant’s actual financial position and employment status; be factually correct and true, as it is
Any other information that may assist the Trustees in making an a criminal offence to make false or
equitable distribution. incorrect statements in an affidavit.
Protekt&Preserve | 2
One-on-one with
Shirley Mabusela
In this issue, we meet Shirley Mabusela, a member
of the Board of Trustees of Protektor. Shirley is
also a Board Member of various other eminent
organisations and a keen businesswoman with
a sharp focus on doing business in a socially
responsible manner. When this busy mother and
grandmother finds a free moment in her schedule,
she enjoys music and reading. We asked Shirley
about her role as a Trustee and her views on saving
for retirement.
What do you see as your principal role as a Trustee? primarily because as a gender activist and as an individu-
To honour the trust placed in me by the members of this al who is committed to ensuring that children’s rights are
Fund, I must strive to ensure that contributions are appro- protected, I am heartbroken when the lack of understand-
priately invested in vehicles that offer good growth while ing of the death claims process results in undue hardship.
at the same time mitigate risk factors in order to protect This is compounded by the failure to submit basic
members’ retirement savings. I must also make sure that documents and sometimes the lack of banking account
members and their beneficiaries have financial security on details delays the payment of much needed funds. The
retirement, death or disability, and that members’ rights realities of child-headed households, as AIDS makes its
are protected. impact, is also painful to see, and it with a heavy heart
that we see how grandparents and children are forced to
What advice would you like to give members take responsibility for their families. In our society, where
regarding their financial wellbeing? multiple marriages are accepted in many cultures, there is
I believe that members should seek financial advice from often a danger that one set of the family is excluded from
a registered service provider, they must also set them- the benefit and we as Trustees have to be vigilant in this
selves goals (financial goals) and remain committed to regard. Sometimes even the deceased’s wishes prejudice a
these goals. I would strongly recommend that we as child or a spouse, and it is for this reason that the Act gives
South Africans avoid the debt trap and, if we have debt, to
us Trustees discretionary powers, which in certain circum-
liquidate this debt and gear ourselves for savings. We are
stances allow us to override the deceased’s wishes. As we
often tempted “to buy things we don’t need with money
enter the 16 days of activism against abuse of women and
we don’t have to impress people we don’t know”!
children I am ever mindful of my role as a Trustee to ensure
What is the best retirement saving decision you the equitable and just distribution of benefits.
ever made?
What do you see as the biggest obstacle
I bought two retirement annuities many years ago. When I
to members being financially secure at retirement?
got divorced, I was highly tempted to cancel one of them.
But I didn’t and I am very pleased that I didn’t, because The tendency of members to cash in their retirement fund
my benefits will be so much greater when I retire in a few benefits when they leave their jobs has a dire effect on
years’ time. their ability to retire financially secure. Given the current
high interest rates and heavy debt burdens carried by
What are some of the challenges you face as some members, it is understandable to want to take the
a Trustee? cash and pay off debt. But, it is critical for members to
As an active member of the death claims sub-commit- continue to save and preserve their withdrawal benefits
tee, I encounter many challenges and frustrations. This is just like you have wisely done!
Shirley Mabusela is also a Board Member of the Centre for Education Policy Development, the Human
Rights Institute of South Africa, the Nelson Mandela Children’s Fund and the Centre for Human Rights of
the University of Pretoria, as well as Chair of HydroWSA, a consortium of women-owned companies that
focus on renewable energy and mining. A former Chair of the South African Human Rights Commission,
Shirley holds a BA Social Work Degree from the University of the North, as well as a Management Diploma
and Postgraduate Diploma in Advanced Social Work Practice from Wits University.
Protekt&Preserve | 3
Staying calm
in a sea of
investment
troubles
October 2008 was a tough month in the world of finance. It started with a credit crunch that soon escalat-
ed into a money melt-down in the United States. Other markets then reacted and stock indices around the
world, including our own JSE, went into free-fall. Although it is impossible to say when the current global
economic environment will take a turn for the better, two things are certain: volatility is a fact of life; and
you should not make hasty investment decisions as a result of short-term market downturns.
Market volatility: what goes down, must come up! Equities remain your best bet in the long run
The reality is that volatility (the ups and downs in the in- In spite of short-term instability, equities are still the best
vestment markets) is a normal feature of equity markets, way to invest your money in the long term. Analyses of
both locally and internationally. the returns of different asset classes over different in-
vestment periods show that the performance of all asset
Investment markets function in cycles, sometimes down
classes is unstable and unpredictable over the short and
cycles (bear markets) and sometimes up cycles (bull
even medium term. However, research has also shown
markets), and it is inevitable that there will be times when
that, over the long term, equities significantly outperform
investments do not perform well or may even decrease
the other asset classes, like cash or bonds, yielding returns
in value. When this happens, it is normal to be concerned
that consistently beat inflation.
about one’s savings. However, it is important not to panic
- remember that saving for your retirement is a long-term
commitment and stay focused on your long-term goals.
What is smoothing?
Smoothing out the rough times Smoothing is when the insurer holds back
Given the current volatile market environment, being
investment growth earned in the good years
invested in a smooth bonus type product has proven
and then releases what has been held back
valuable, because these products are designed to
enhance the stability of the returns without sacrificing when investment growth is low or even
the longer-term growth. negative. The insurer thereby smoothes out
highs and lows in investment performance,
With these products, asset managers invest your money
providing the member with a more stable
taking a long-term view of the market, which means
that they won’t change their strategy based on current
pattern of growth. In addition, the insurer
market ups and downs. This allows them to benefit from provides a guarantee below which member’s
long-term market growth without being too concerned interest cannot fall. Over the long term,
about short-term market volatility. The result of this is the investor should receive market-related
that you earn a more stable investment return during performance less the cost of guarantees.
uncertain markets.
The Old Mutual Guaranteed Fund, which
Experience has shown that it is not timing the market, makes active use of the smoothing principle,
but time in the market that is important. Don’t act on
is one of the investment options available
impulse - stay invested over the full market cycle and
stick to the long-term asset allocation that matches your under Protektor.
risk profile.
Investment wise...
It is advisable to invest in equities over the long term if you want to build up enough savings to retire comfortably.
Switching is dangerous and you should only switch portfolios if you have spoken to a qualified financial adviser.
It is advisable to review your investments from time to time in line with your retirement strategy, but don’t take
action without getting advice from a qualified financial adviser.
Licensed Financial Services Provider
