small, medium & micro

enterprises

25 October 2007

small, medium & micro enterprises

Agenda

• Lets talk about 2010!

• Do SME’s have unique needs?

• What are the benefits for employers to provide employee

benefits?

fundsatwork

Agenda

• Lets talk about 2010!

• Do SME’s have unique needs?

• What are the benefits for employers to provide employee

benefits?

fundsatwork

small, medium & micro enterprises

Lets talk about 2010!

• Trevor Manual said: “Plan and prepare for the long term.”

• “…too many people … cash in their benefits when they change jobs.”

• The number of people savings in SA has reduced from 9% to 4% in

the last 10 years

poverty / social security comfort / prosperity

Lets talk about 2010!

Retirement fund reform: broad principles

move from voluntary to compulsory

enforced savings and preservation

amalgamation of state benefits

The existing retirement savings industry serves a limited section of the population. Social security systems are effective

worldwide at redistributing wealth

Lets talk about 2010!

fundsatwork

Compulsory occupational pension

• Unemployment• Retirement• Death & disability

Threshold 1 (tax encouragement) earnings ≤ ?

Social assistance

grant

Private pension

provision

NationalSocial

SecurityScheme

Voluntary occupational pension fund or private pension fund

Threshold 2 (tax encouragement) earnings ≤ ?

Above Threshold 2 (limited tax encouragement)

Above Threshold 3 (no tax encouragement)

Retain social assistance grant (old age pension) but increase or remove the means test threshold

Lets talk about 2010!

poverty / social security comfort / prosperity

Lets talk about 2010!

fundsatwork

• Employers are going to have to contribute to the fund for their

employees

• Employees are going to also have to contribute, possibly reducing their

take-home pay

• Consumers are going to have to become more educated and more

interactive with their retirement, death and disability benefits

How does this impact on you and your employees?

Lets talk about 2010!

Agenda

• Lets talk about 2010!

• Do SME’s have unique needs?

• What are the benefits for employers to provide employee

benefits?

fundsatwork

small, medium & micro enterprises

fundsatwork

• Entrepreneurial culture

• Creating a sustainable business is their main focus

• Expertise in a specific area of their business, therefore do need to be bound

down with all the legislation and pension fund issues

• Key staff often pose a high risk to the business if they leave

• They do not have the same bargaining power as a large corporate

• Often resources are already stretched to just cope with basic day to day HR

admin

fundsatwork

Do SME’s have unique needs?

fundsatwork

Are there products for SME’s?

• They are called Umbrella funds

• Multiple employers enjoy the benefits as if they were a large corporate

• Pricing becomes competitive

fundsatwork

Do SME’s have unique needs?

fundsatwork

Agenda

• Lets talk about 2010!

• Do SME’s have unique needs?

• What are the benefits for employers to provide employee

benefits?

fundsatwork

small, medium & micro enterprises

fundsatwork

Advantages for you as an employer

Benefits for providing employee benefits

• Allows for the stability and contentment of the employees, which results in

lower staff turnover and the reduction of recruitment and training costs

• Helps to attract better calibre of staff

• Social responsibility

• Employer contributions are tax deductible

fundsatwork

Advantages for your employees

Benefits for providing employee benefits

• Provides security and provides a base for all their retirement, life & disability

plans

• Ensures that employees are adequately covered and can provide for

themselves and their dependants in the event of death, disability and

retirement.

• Employee contributions to a pension fund are tax deductible.

• Life and disability cover while employed may be obtained at a lower cost

than individual cover.

fundsatwork

Get off the starting blocks!

• Competent financial advisers are there to guide you through the process

• Start now so that your employees can get used to saving over a period of

time

small, medium & micro enterprises

fundsatwork

Questions?

Thank you