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Financial Planning (retrenchment)
Financial Planning
(Retrenchment)
Money
Management
Capital
Gains Tax
Women Market
Education
Death & Disability
Short Term Insurance
Business Entities
Investments
Retirement (Personal)
Financial Planning
(General)
Financial Services Offered
Trust, Wills & Estates
Financial Planning (retrenchment)
““If If tthe deal sounds too good he deal sounds too good tto o be true – it probably isbe true – it probably is.”.”
Seek objective adviceSeek objective advice
BE CAREFUL!BE CAREFUL!
Financial Planning (retrenchment)
RetrenchmentRetrenchment
NOWNOW, more than ever before, prudent decisions have to be made ...
Financial Planning (retrenchment)
RetrenchmentRetrenchment
What will you get?
What do you need?
Planning for those needs
Important indicators
Financial Planning (retrenchment)
What will you get?What will you get?Provision by employer: Pension fund benefits Payment on termination of
service Payment of accumulated leave Bonus – pro rata Other rewards or gratuities
Personal provision: Savings Policies Unit trusts Shares
Financial Planning (retrenchment)
How are you going to cover these expenses?
IncomeIncome Mortgage bond (market
linked) Day-to-day expenses Car loan HP agreements Policies/Savings Overdraft facility Groceries Electricity Water Telephone Insurance Education costs
NEED
Financial Planning (retrenchment)
Liquidity Liquidity ((Contingency fundContingency fund))
For unforeseen expenses: Repairs to household
appliances Illness
For ad hoc expenses: Maintenance
NEED
Financial Planning (retrenchment)
Current situation at age 65
Working 31%
Dependent on state
pension 16%
Financially independent 6%
Dependent on family 47%
Retirement PlanningRetirement Planning
Planning for a financially independent retirement NEED
REASONS: Income gap Inflation Longer life
expectancy Cost of delay
Financial Planning (retrenchment)
Life CoverLife Cover
Loss of relatively cheap group life cover: Conversion a possibility? Probability of losing group life cover?
Additional life cover from other sources sufficient
NEED
Financial Planning (retrenchment)
NEED
Disability CoverDisability Cover
Loss of group life cover:
Can I retain my disability cover? Will a conversion of my
group life cover include disability cover?
What do I have at present?
What is reasonable provision?
Impact of inflation
Financial Planning (retrenchment)
Medical CoverMedical Cover Loss of medical fund benefits
Can I afford not to have medical cover?
Can I afford membership of a medical fund?
Role of medical insurance in bridging the gap
NEED
Financial Planning (retrenchment)
Planning to meet your Planning to meet your needsneeds
A – Qualified financial advice
B – Analysis of needs: now and in the future
C – Well structured portfolio
Financial Planning (retrenchment)
OOLDLD MUTUAL MUTUAL INTERMEDIARYINTERMEDIARY
ClientServices
LegalAdvice
ActuarialSupport
Old Mutual/AssociatedCompanies
Expertise in financial planning
Excellent support
A Qualified, objective financial Qualified, objective financial adviceadvice
Financial Planning (retrenchment)
Tax AdviceTax AdviceMinimise tax on your
benefits Make tax-efficient
investmentsExempt from tax
Average rates
Marginal rates
Financial Planning (retrenchment)
B Analysis of needsAnalysis of needs
Financial Planning
Protection of familyand estate Wealth creation
Life cover
Health cover
Disability cover
Investment
planning
Retirement planning
Financial Planning (retrenchment)
Analysis ofAnalysis of Needs Needs ((continuedcontinued))
Professional and/or computer-based financial planning analysis
Structuring a package and adjusting it at the touch of a button
Reviewing your will
Financial Planning (retrenchment)
Contingencyfund
Income-generating
investmentsGrowth
investments
Life, disability and health cover
C Well Structured PortfolioWell Structured Portfolio
Financial Planning (retrenchment)
Liquidity Liquidity ((Contingency fundContingency fund))
Selling redundant assets
Realising assets
Role of your bank manager
Realising retirement fund benefits – income tax implications
Financial Planning (retrenchment)
IncomeIncome R6 000 interest exempt from tax Maximise after-tax income Investment of R75 000
Monthly income
Fixed deposit R906 R543
Participation bonds R953R561
Income plan* R718R642
Before tax After tax
(Guaranteed)* Assuming a tax rate of 40%
Financial Planning (retrenchment)
Important IndicatorsImportant Indicators
Realising your pension fund benefits
Realising your policies
Financial Planning (retrenchment)
Cost of realising pension fund Cost of realising pension fund benefitsbenefits
Financial peace of mind is not provided by contributions alone, but by compounding returns on contributions over time.
Realising of pension fund benefits implies a loss of the compounding effect.
Financial Planning (retrenchment)
Income gap at retirement - Pension vs Salary40%
gap60%gap
70%gap
Realising pension fund Realising pension fund benefits benefits (continued(continued)) “Income gap” factor should be considered: Less
years of service = smaller pension Money earned for, retirement should be invested
for that purpose
Financial Planning (retrenchment)
Implications of realising Implications of realising policiespoliciesLapses
Surrenders/Cancellations
Loans
Recommendations:
Avoid lapses
Consider making policies paid up
Financial Planning (retrenchment)
Making your money work Making your money work harder for youharder for you……
helping you every step of
the way
Financial Planning (retrenchment)
SalaryBonusAllowancesSubsidiesMedical coverGroup life coverRetirement provisionDisability cover
ConclusionConclusion
Employed Unemployed
Lose Receive Need
After-tax Lump sum UIF Benefits
IncomeGrowthMedical coverLife coverDisability coverLiquidity