seshego benefit consulting knights college retirement fund choices 11 january 2010
TRANSCRIPT
Seshego Benefit Consulting
KNIGHTS COLLEGE
RETIREMENT FUND CHOICES
11 January 2010
SESHEGO BENEFIT CONSULTING
WHAT IS BEING MADE AVAILABLE An explanation letter A Member Investment Choice (MIC) booklet Supporting MIC portfolio fact sheets A member choice form A presentation on the choices Illustration software that you can get from
Elizabeth Laubscher A website page with the communication on
www.saopenfund.co.za/Knights.htm
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CHOICE ISSUES Why choice? Trustees’ role in choice funds Communication available Elect single MIC portfolio. Annual choice. Contribution rate and death cover ONCE
OFF
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FINANCIAL PLANNING Retirement, Risk & Estate Planning Retirement - Budget Set a realistic target Risk - Who are your dependents What are your assets Plugging the gaps Estate Planning – Get advice, if needed
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RETIREMENT PLANNING Defer retirement Additional contributions Invest differently Modern Portfolio Theory Growth assets are included for long term
capital growth
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FTSE/JSE long-term return
61%
0%
-10%
29%
-8%
16%
25%
47%
41%
19%
-23%
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Annualised returns over 40-years April 1969 – March 2009 (Gross)
10.0% 10.0% 10.0% 10.0%
3.5%6.3%
0.9%1.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Equity Bonds Cash Property
Inflation Real Returns
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INVESTMENT CHOICES Inflation plus 7% Inflation plus 5% Inflation plus 3% Capital guarantee portfolio How are you going to invest after
retirement? Default is Inflation plus 5%
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PORTFOLIO CONSTRUCTION
0%
26.92%
53.98%
70.39%
0%
39.62%
20.12%
6.65%
0%
3.41%
13.59% 11.60%
100%
29.40%
11.15% 10.39%
0%10%
20%30%
40%50%
60%70%
80%90%
100%
Capital Guaranteed CPI + 3% CPI + 5% CPI + 7%
Equities Bonds
Property Cash & Money Market instruments
Alternative Investments Commodity
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DEATH COVER
5X annual pensionable salary (net 4%) 3X annual pensionable salary (net 3%) NIL cover (net 1,5%) Disability cover not optional Insurance costs change
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INVESTMENT NET OF COSTS
By way of example:
Contribution 14,00% e.g. R100,00 Less Group Life 1,38% e.g. R 9,86 Less PHI (disability) 1,08% e.g. R 7,71 Less admin costs (estimate) 0,65% e.g. R 4,64 NETT towards investment 10,89% R 77,79
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IN SUMMARY
Do a budget to set a retirement target, then put in place a retirement plan
Establish the life cover you need Get professional help if you need estate
planning Stick to your plan
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