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it’s difficult to believe that it is date time of the year again, income tax returns can be filed as from the 1st of july 2010.c
cipro has announced they will de-register all cc's/companies who haven't submitted their outstanding annual returns before
provisional tax returns for the period 2010 for all businesses are due before the end of the week
Request for Professional Financial Planning
Myfinance-online has partnered with Van Rooyen and Raath Financial Advisors (Pty) Ltd (‘VRR’) to supply our clients with tailor-made financial advice and intermediary services.
VRR is an authorised financial services provider FSP 33603 and they have been providing financial advice and intermediary services as an entity since 1 March 2008.
The two key individuals of the company is Marius van Rooyen who holds a B Compt degree and is registered as a Certified Financial Planner ® (‘CFP®’) and Henri Raath who is registered as a CA(SA) and CFP®.
VRR is accredited with PPS, Sanlam, Momentum, Liberty, Allan Gray, Marriott and Altrisk to market and sell their products.
Solutions provided by VRR
Life cover
VRR’s approach is to implement necessary life cover early in our clients' lives, but to decrease this cover systematically as the clients near retirement age because their investments should be in place then to provide in their needs.
If clients’ estates are also structured correctly throughout their lives by limiting the growth in their own assets the liability for estate duty should be minimal if they should die, and there should be no motivation to have life cover anymore. Life cover also becomes more expensive as individuals become older.
Income protection
With income protection the insurance company "replaces" clients’ income subject to statutory
restrictions when clients becomes medically disabled to work until a certain age (for example 55, 60 or 65).
Clients can then use this payout to maintain their normal financial obligations until the specified age that they protected for. Some insurance companies (PPS and Sanlam Cobalt) also provide a sickness benefit which (without proof of loss of income) pays out when an insured is absent from work for longer than 7 consecutive work days (for a maximum period of 2 years).
We recommend a monthly income protector rather than a lump sum payout because insurance companies can budget easier for a smaller monthly benefit than one single lump sum benefit that will have a bigger effect on their capital budgets. Lump sum cover is therefore a much more expensive option than a monthly income protector. The responsibility to manage a lump sum payout effectively for the rest of your life is also much greater than to receive a fixed monthly payout until you reach the age of 55, 60 or 65.
We also do not take into account group benefits that clients may have with their employers with our recommendations because private risk cover benefits are attached to clients for their whole careers, irrespective of where they may work in future.
Dread disease/critical illness cover
We do not recommend this type of insurance unless clients specifically request it. We rather focus on a combination of comprehensive income protection and medical aid cover.
Retirement planning
A common view among people is that only poor people cannot afford to retire. However, many of the people that have to keep working after retirement are those who had very good income streams throughout their careers, but they convinced themselves that they saved enough to maintain their lifestyles when they do not have to work anymore.
The earlier people implement a retirement planning strategy, the bigger their chances are to retire comfortably. We believe that the success of the build-up of a sufficient retirement investment portfolio does not depend on timing of the investment markets, but rather of the time that clients spend in the market. The effect of compound interest has to be taken into account here.
With retirement planning we want to determine how much people need to invest today to replace an income of at least two thirds of their current earnings in today's terms at age 65. We use a long term internal rate of return on investments ('IRR') of 10% per year, an inflation rate of 7% per year and an increase in contributions to retirement vehicles of 5% per year as variables with this calculation.
We combine an employer's retirement fund, retirement annuities, unit trusts and other investments in our calculations. We aim to explain the different characteristics of these products to our clients so that their investments can agree with their main goals and risk profile.
Preservation of South African retirement benefits when an exit event occurs
These days individuals do not work for one employer until they retire. Whether they resign for a better opportunity, take an early package or their employer's retirement fund is dissolved ('exit events') they have to decide what to do with their fund benefits that become available from these funds.
Individuals have a number of options when an exit event occurs and sometimes it is justifiable that they take the fund benefits as a cash payout. However, we strongly believe that they should preserve their retirement benefits when an exit event occurs either in a preservation fund or a retirement annuity fund, mainly because there are heavy income tax penalties when they withdraw their retirement benefits (as highlighted below) but also because of the fact that only 6% of South Africans can retire comfortably when they reach retirement age.
Income tax is payable on the gross payout at the following rates:
|
Amount |
Rate |
|
R0 to R22,500 |
0% |
|
R22,501 to R600,000 |
18% |
|
R600,001 to R900,000 |
27% |
|
R900,001 and more |
36% |
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