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DATE: August 2019

Dear stakeholder

There has been much speculation in the media about whether Government intends to introduce prescribed assets. The first wave of speculation was prompted by the ANC’s election manifesto launched in January this year, which stated that the ruling party would like to see the introduction of prescribed assets investigated. This was further fueled by a number of comments made by politicians on different occasions, which were unfortunately misunderstood and taken out of context. This resulted in some public panic and extensive media coverage.

Since the launch of the ANC’s election manifesto at the beginning of the year we have responded to some 20 requests from the media for interviews and comments on prescribed assets. On Sunday, 1 September, Carte Blanche broadcast a programme on the issue of prescription of assets, which included an interview with Leon.

Based on previous engagements with various relevant parties on the potential impact of prescribed assets, including Government Ministers, our view remains that there is currently no indication that prescription of assets is, or will be, Government policy.

ASISA’s position on the prescription of assets is set out on our website.

Economic transformation

Finance Minister Tito Mboweni published a paper titled “Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa” on 27 August 2019. The paper aims to "translate the broad outcomes of inclusive growth, economic transformation, and competitiveness into specific programmes”.

Minister Mboweni requested that interested parties comment on this paper by 15 September 2019. ASISA therefore requested members to submit comments for consolidation into one industry submission by the ASISA Economic and Savings Policy Board Committee and the ASISA Investments Board Committee.

Meeting the new Accountant General

Following the appointment of a new Accountant General within National Treasury, a senior ASISA delegation met with the Director General of National Treasury and the new Accountant General. The aim of the meeting was to:

  • Introduce ASISA to the new Accountant General;
  • Provide an overview of the Government Payroll Deduction facility;
  • Highlight the benefits of this facility for government employees; and
  • Discuss possible improvements and requirements to the facility.

The meeting concluded with a number of positive outcomes. At the request of the Accountant General a follow up meeting was arranged to respond to specific questions regarding the payroll deduction facility. National Treasury also requested ASISA members to intensify consumer education efforts and to facilitate financial inclusion through attractive savings products.

Retirement Savings Cost (RSC) Disclosure Standard

The RSC Disclosure Standard came into effect on 1 March 2019 with a final implementation date of 1 September 2019. All ASISA members should now be in a position to make the required disclosures available.

The RSC Disclosure Standard commits ASISA members to present all costs relating to umbrella retirement fund solutions (based on certain assumptions) in a standardised manner, enabling employers to compare like with like when considering quotations from different ASISA members.

CIS assets under management grow to R2.4 trillion

The local Collective Investment Schemes (CIS) industry completed the second quarter of this year with assets under management of R2.4 trillion, spread across 1 607 portfolios.

Statistics for the quarter and year ended June 2019, released by ASISA in August, show that almost half of these assets were held in South African (SA) Multi Asset portfolios (49%), with the rest in SA Interest Bearing portfolios (29%), SA Equity portfolios (19%) and SA Real Estate portfolios (3%).

The industry recorded net inflows of R25 billion for the second quarter of this year, bringing the total net inflows for the 12 months to the end of June 2019 to R143 billion.

Claims against fully underwritten individual life policies

The 2018 annual death claim benefit statistics for fully underwritten individual life policies were released by ASISA in August. The statistics show that ASISA members paid 33 545 claims, representing 99.3% of all claims received. Life insurers declined 222 claims, a mere 0.7% of claims against underwritten individual life policies in 2018.

The value of death claim benefits for fully underwritten individual life policies has more than doubled from R6.8 billion to R15.1 billion since ASISA started consolidating statistics in 2012.

Fully underwritten life policies are only issued if the individual policyholder has completed a full underwriting process, which involves a comprehensive assessment of the life insured’s health and medical history.

ASISA Academy

At the request of the Capital Markets Authority (CMA) in Uganda, the ASISA Academy presented a bespoke three-day Collective Investment Schemes (CIS) bootcamp to 35 delegates in Kampala during August. The CMA is a semi-autonomous body responsible for promoting, developing and regulating the capital markets industry in Uganda, with investor protection and market efficiency as the overarching objectives.

The delegates who participated at the invitation of the CMA included representatives from the CMA, the Ugandan stock exchange, trustees, as well as investment houses and insurers. Topics covered included legislation and the structure of unit trusts, marketing and distribution so as to expand the reach of unit trusts in Uganda, and the responsibilities of the regulator and the market participants.

The Academy is responding to a growing number of requests for learning programmes from other African countries. Successful deliveries have already taken place in Ghana, Namibia, Botswana and Eswatini.

An overview of the Academy’s programme offering can be found here.

ASISA Foundation FLAME 2.0

The first phase of the ASISA Foundation Financial Literacy and Micro-Enterprise (FLAME 2.0) Programme, launched in Philippi near Cape Town in July, has been completed successfully. 

Philippi was chosen for the rollout of the first phase and a partnership was established with the PEDI Urban Agriculture AgriHub, which focuses on the development of small urban farmers in the township of Philippi. The first FLAME 2.0 participants were selected from their network of Agri-entrepreneurs.

Out of the 20 farmers selected, 17 completed the first phase and will now move on to the second phase of the programme. Phase 1 focused on facilitating the development of personal and business financial literacy skills, personal entrepreneurial skills, as well as key elements of business development skills.  The second phase of the FLAME Programme will focus on the expansion of these skills at a much deeper level over the next 22 months.

Also, during August the selection process for phase 1 of FLAME 2.0 started in Diepsloot, Gauteng, and the greater King Williams Town area in the Eastern Cape. 

The FLAME Programme empowers micro–enterprise owners to sustainably develop and grow their businesses with confidence, create employment and contribute to the local and national economy through an accredited business development methodology, using financial literacy as a core development tool.

ASISA Enterprise and Supplier Development (ESD)

The success of the Insurance Sector Education and Training Authority (INSETA) 2017 Broker Development Programme, delivered in partnership with the ASISA ESD initiative, was celebrated at a formal close-out event in August.

The programme, concluded in May this year, provided specialised growth support interventions to 15 black-owned independent financial adviser practices (also known as brokerages). Through the programme, 14 jobs were created and the brokers achieved an average revenue growth rate of 21% year-on-year. The average retention rates improved from 86.8% at the start of the programme to 92.3% at the end of the programme. 

At the close-out event in August, INSETA announced an even bigger programme to be delivered in collaboration with the ASISA ESD initiative. The 2019/2020 INSETA Broker Development Programme will include a broker development programme that will provide support to 30 brokers and a supplier development programme that will provide support to 30 insurance industry suppliers, both for 18 months. INSETA’s objective is to enhance the development of and investment in high-potential black-owned insurance service providers.

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