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Financial Planning (retrenchment) Financial Planning (Retrenchment) Mon ey Management Capital Gains Tax Women Market Ed ucation Death & Disability Short Term I nsurance Business Enti ties I nvestments Retireme n t (Personal) Financial Plan ning (General) Financial Services Offered Trust, Wills & Estates

Financial Planning (Retrenchment)

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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

Thank you

Financial Planning

(Retrenchment)

Money

Management

Capital

Gains Tax

Women Market

Education

Death & Disability

Short Term Insurance

Business Entities

Investments

Retirement (Personal)

Financial Planning

(General)

Trust, Wills & Estates