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Empower Your Staff With A Group Retirement Annuity

Employers who illustrate to their staff that they care about their futures by providing them with a retirement savings solution, along with investor education, are likely to see increased employee engagement.

Allan Gray

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  • Company: Allan Gray
  • Contact: 0860 000 654 or +27 (0)21 415 2301
  • Visit: allangray.co.za

Belinda Carbutt from Allan Gray explains how easy it is to look after your employees’ retirement savings using a group retirement annuity system.

Today’s workforce tends to be highly mobile. Employers need to think carefully about the benefits that they offer, as these are often key in attracting and retaining staff. One such benefit could be a RETIREMENT ANNUITY FUND (RA).

RAs are like a personal retirement plan — they are designed to suit the individual, to move around with him or her, and, because they are not linked to the employer, become a life-long benefit, rather than a benefit that is merely a condition of employment.

We-recommend-tickWe recommend: Does a Retirement Annuity Make Financial Sense?

RAs send out the message that the employer cares about its employees’ futures and has put measures in place to help them save for their retirement.

RAs can be managed on a group basis through a group retirement annuity system, such as Allan Gray’s Group RA. In many ways group RAs are a better choice for employers and their employees than other retirement funding options, such as umbrella funds, which can have high set-up costs and time-consuming administrative requirements.

A group retirement annuity system allows employers, particularly SMEs, the time to manage their businesses while avoiding tedious administration requirements, all the while not detracting from the importance of retirement saving for their employees.

Group systems also ensure that employees get all the benefits of an individually managed RA. These include: 

Individual accountability and choice

Employees join the RA in their individual capacities. This gives each employee control of their retirement savings.

Employees may choose from a range of underlying unit trusts to meet their individual investment objectives. At the same time, their selection must comply with the prescribed legal investment limits for retirement funds.

Each employee can use the services of their own independent financial adviser if they need help in making their investment decisions, or an employer could negotiate with a single independent adviser to provide unbiased advice to employees.

Tax advantages

Contributions to an RA (within certain limits) are tax deductible, and the returns employees earn while invested in an RA are tax free. However, at retirement any cash lump sum taken will be taxed according to the retirement tax tables and the portion transferred to a pension-providing product will be taxed at the marginal tax rate when it is paid out as income.

Value for money

In many ‘modern’ RAs the fees depend on the unit trusts employees select.

In Allan Gray unit trusts, investment management and administration fees are charged within the unit trusts and are deducted before the unit trust’s performance is published.

In this case, all the costs of investing in the Allan Gray RA are taken from these fees and no additional fees come off the initial investment, or from the investment balance, as the employee goes along, other than fees for financial advice if a financial adviser is used.

There are no switching fees and no exit fees. The return employees see is what they get. In addition, there are no other costs associated with managing multiple RAs in the group system.

Flexibility

One of the big advantages of group RAs is that they allow flexibility of contributions, without any penalties:

  • Employees (at the employer’s discretion) can stop and start contributions
  • Employees (at the employer’s discretion) may increase/decrease their contributions
  • Employees can switch underlying unit trusts as their needs change
  • Employees can either continue contributing if they leave their employer, or they can stop contributing.

Investment protection

The investment is protected from potential creditors. 

Preservation

The majority of South Africans do not retire financially secure. One of the reasons for this is that individuals access their retirement savings before retirement age. With an RA there is forced preservation; savings cannot be taken as cash before the age of 55.

We-recommend-tickWe recommend: Reaching Retirement with Enough Capital

While this means no access to cash at a time when some cash may be useful, the discipline of having a pot of money that will be there at retirement empowers people to secure a better future.

Transparency, communication and education

Approaches to communication vary depending on the RA provider. Allan Gray allows members to monitor and administer their investments online. This is essential in giving individuals ownership and a sense of responsibility for their investment. Allan Gray also offers member training and education.

For more information please watch the video at www.allangray.co.za/what-we-offer/group-RA.

Allan Gray Unit Trust Management (RF) Proprietary Limited (the ‘Management Company’) is registered as a management company under the Collective Investment Schemes Control Act 45 of 2002. Allan Gray Proprietary Limited (the ‘Investment Manager’), an authorised financial services provider, is the appointed investment manager of the Management Company and is a member of the Association for Savings & Investment South Africa (ASISA). The Allan Gray Retirement Annuity Fund is administered by Allan Gray Investment Services Proprietary Limited, an authorised administrative financial services provider and approved under s13B of the Pension Funds Act as a benefits administrator.

Allan Gray has been investing on behalf of clients since 1974. We have offices in South Africa, Botswana, Namibia and Nigeria, and through our relationships with our sister companies, Orbis and Allan Gray Australia, we are well positioned to research and identify long-term investment opportunities for investors. We are focused on generating long-term wealth for our investors.

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The Alfa Romeo Stelvio – More Than An SUV

The All-New Alfa Romeo Stelvio draws inspiration from the legendary mountain pass linking Italy to Switzerland, with 48 hairpins in quick succession.

Alfa Romeo

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The All-New Alfa Romeo Stelvio draws inspiration from the legendary mountain pass linking Italy to Switzerland, with 48 hairpins in quick succession. The Stelvio pass is widely seen as one of the most beautiful and engaging roads on the planet.

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Enhance Your Entrepreneurial Flair With An Online Postgraduate Diploma From The University Of Pretoria

The Department of Business Management at the University of Pretoria, a leader in business management education, will be offering an Online Postgraduate Diploma in Entrepreneurship for the 2018 academic year with some seminars to enrich your action learning experience.

Dr Alex Antonites

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The Department of Business Management at the University of Pretoria, a leader in business management education, will be offering an Online Postgraduate Diploma in Entrepreneurship for the 2018 academic year with some seminars to enrich your action learning experience.

The programme content focuses on the start-up processes, creativity and opportunity recognition, business planning and marketing as well as financial management. Furthermore, the programme emphasises entrepreneurial growth and small business policy development with relevance to the enabling environment.

Who should enrol?

The programme is designed for pre-, nascent and start-up entrepreneurs who want to attain an advanced degree in entrepreneurship. It is also intended for individuals who work in an entrepreneurial environment and are involved with small business policy development. Although many students in the programme have academic credentials in entrepreneurship or business management, the programme is also appropriate if your education and/or experience may be in other disciplines (e.g. engineering or medicine).

Admission requirements

A relevant bachelor’s degree.

Related: This Enterprises UP Expert Explains Why Start-Ups Really Fail

Additional programme information

The duration of the course is one year. The language of tuition is English and the course will be presented in two blocks by means of the blended learning method (70% online and 30% contact sessions). Students need continuous access to the internet to complete the course.

Course Contents

Overview of modules for Block A

  • Ideation-to-market: Starting up
  • International Business Venturing
  • Venturing Strategy Building (Part 1)

Overview of modules for Block B

  • Entrepreneurial Marketing
  • Entrepreneurial Supply Chain Management
  • Entrepreneurial Finance
  • Venturing Strategy Building (Part 2)

Click here for more information.

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Win A Business Makeover With Retail Capital To The Value Of R250 000

Retail Capital is giving SMEs an opportunity to win a makeover to build their brand with an investment of R250,000.

Retail Capital

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Retail Capital is giving SMEs an opportunity to win a makeover to build their brand with an investment of R250,000. During the summer campaign, SMEs are encouraged to share the vision of how they would like to see their business grow, and led by a team of experts, Retail Capital will work with the winning SME to help make their vision come true.

While South Africa’s economy is not faring well, Retail Capital CEO Karl Westvig remains optimistic about the country’s retail and hospitality sectors. “We are seeing some green shoots, with an increase in turnover in these sectors – starting from the end of September. Economic conditions remain very tough, but businesses seem to be trading well into October and we’re hoping this continues into the festive season trading.”

According to recent statistics from Statistics South Africa (Stats SA), South Africa’s retail sales rose by 5.5% year-on-year in August 2017, following a downwardly revised 1.6% gain in the previous month and above market expectations of 2.3%. It is the biggest gain in retail trade since August of 2012.

Related: How To Raise Working Capital Finance

“I do believe that these sectors will see an improvement during the summer season. But, key to this will be for small business owners to ensure that they have the right amount of stock, adequate cash flow, as well as other systems in place to meet the ever-changing needs of customers,” says Westvig.

For many small businesses, however, continually adapting to market changes requires cash injections that they don’t often have.

The prize includes the following:

  • Business plan/consulting
  • Marketing strategy
  • Design and branding
  • Website and social Media and,
  • R50k capital to gear your business.

Westvig explains that the summer campaign tagline ‘Your Vision. Our Belief’ really speaks to why Retail Capital first opened its doors. “Our goal is to see the potential of small businesses and to work with them in making these become a reality.”

He adds that the idea is not to simply help one business during the campaign either. Westvig points out that one of the biggest challenges that small businesses face in the sluggish economy is enough foot traffic through their doors. “Generally, the main hurdle in creating brand awareness and projecting credibility of their establishments boils down to establishing a strong online presence.”

“One of the first ways that South Africans identify a business or service provider that they want to work with is over social media – even in a country where the digital divide has traditionally separated the technological haves from the have-nots,” he says.

He explains that companies that don’t have a social media presence are running the risk of being overlooked entirely. “They may attract customers in their own community with signage or word of mouth, but to grow a business, they need to expand their reach – and that’s where social media comes in.”

But, the reality is that resource and time constraints mean that for many SMEs, social media is not prioritised. “Unfortunately for the average small business owner, they don’t have the time or expertise to get connected.”

Understanding the importance of having an online presence, Retail Capital has also committed to developing the digital presence of all campaign entrants. This would include setting up each entrant’s digital presence on platforms such as Google, Facebook, Twitter, Tripadvisor, Zomato and any others that may be relevant to their specific market or industry.

“As a partner to many SMEs in South Africa, we are continually looking at new and innovative ways to help provide them with the much-needed support in order for them to realise their visions. SMEs need to be supported with initiatives like targeted education and training, supportive legislation, and funding opportunities that collectively help them grow our national economy,” says Westvig.

Related: 6 Great Tips For A Successful Shark Tank Pitch

Who we are and what we do:

“More than R1.25 billion has been extended to a range of businesses including food trucks, hair salons, restaurants, spas and franchised retail stores. Many of these businesses have not been able to raise funding in any other way, other than to go to unscrupulous lenders,”says Karl Westvig, the CEO Retail Capital, a company that provides working capital with the help of innovative lending technology.

“We have also estimated that for every R160 000 we lend, we create a new job. This means that 625 jobs have been created purely by enabling small businesses to get the funding they need for working capital requirements or expansion opportunities.”

Retail Capital’s system, which enables it to advance funding to small businesses, based on real time information on credit card transactions, is providing a new funding alternative to entrepreneurs who have previously been turned away by banks. Because it is able to get actual sales information, it can approve funding immediately, and allow for flexible repayment options based on sales cycles of the particular businesses it is funding.

“This creates significant opportunity for small business owners to focus on their business and grow volumes or look for expansion opportunities rather than spend their time frantically trying to repay debt or keep the business alive after debt repayments have eaten away at any cash reserves they might have had.”

Retail Capital funding is repaid by it taking a percentage of a business’s recorded credit or debit card sales, with repayments fluctuating in line with their business cycle. This has the effect of ensuring that it isn’t overburdened with debt.

“In the past six years since starting the business, small businesses have had the benefit of R1 billion in funding they would have been unable to get through traditional channels,”says Westvig.

Against the backdrop of recessionary conditions in South Africa, Retail Capital’s client information reveals growth in informal sector turnover across a number of industries.

“We believe that growth in the informal sector is outstripping that of the formal sector,”says Westvig.

As a large proportion of the businesses it funds are women- and black-owned, there is evidence that entrepreneurs who have previously been excluded from access to finance are now enjoying success now that their access to finance problem has been solved.

Win A Business Makeover with Retail Capital

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