Tax Amendments Affecting Retirement Funds & Living Annuities

Pension and Provident Preservation Funds:

Previously SARS did not have a definition for a Preservation Fund. According to the recently published draft Revenue Laws Amendment Bill, Preservation Funds may now be approved as Preservation Funds as long as they amend their rules accordingly by the 30th of September 2008.

The new bill has also changed the following:
Transfers to and between Preservation Funds no longer require an employer/employee relationship.

The options available to beneficiaries at the death of the member have been increased. Previously the beneficiary was only allowed to take cash payment within six months of the death of the member. Now, when a member of a pension preservation fund dies, the dependants/nominees can choose to receive the death benefit as an annuity or a lumpsum payment. If no dependants are found and no beneficiaries were nominated the death benefit can now be paid to the deceased member's estate as a lumpsum.

Transfers of divorce benefits to Preservation Funds.

A non-member spouse is now able to transfer the pension interest allocated to him/her in terms of a divorce order to a Preservation fund of his/her choice.

Retirement age of a member.

Members no longer have to retire from the fund on the first day of the month in which they turn 70 years old. A member's retirement date will depend on the rules of the fund.

The rules of most funds have been changed to have an open-ended retirement date.

Retirement Annuities:

The options available to beneficiaries at the death of the member.

Previously when a member of a retirement annuity fund died, the beneficiary was only allowed to take a maximum of 1/3rd of the death benefit in cash within six months of the death of the member.

Now:
When a member dies the dependants/nominees can choose to receive the death benefit as an annuity or a lumpsum payment. The maximum cash amount of 1/3rd and the maximum period of six months have been removed.

The death benefit can now also be paid to the deceased member's estate as a lumpsum if no dependants are found and no beneficiaries have been nominated.

Retirement of a member.

Members no longer have to retire from the fund on the first day of the month in which they turn 70 years old. A member's retirement date will depend on the rules of the fund.

Emigration.

Members who emigrate can now withdraw their full benefit and do not have to wait until their retirement date to access their benefit in the retirement annuity fund. However, the full benefit is taxable.

Recent Commodity Price Trends

Prices of most commodities have dropped since their peaks around the middle of this year. Some have dropped back to levels of a year ago. The question to ask is: Could this merely be indicating a large correction on the upward trend or is it an indication that this bullrun is nearing its end?

The answer has important implications for resource rich economies like SA and Australia as commodity prices will affect their export earnings and the value of their currencies.

The broad trend is shown in the CRB commodities index, a widely watched measure of global commodity prices. This index has fallen almost 20% since reaching a record high on July 6.

Commodity % Change from August 2003 % Change from 2008 Highpoint
Aluminium 88 -16
Copper 343 -9
Ferrochrome 357 0
Ferromanganese 448 -6
Gold 123 -18
Lead 286 -50
Maize 154 -21
Managanese Ore 779 0
Nickel 118 -60
Oil 280 -17
Palladium 54 -49
Platinum 95 -34
Rhodium 820 -61
Stainless Steel 171 -23
Uranium 476 -53
Vanadium 764 -8
Wheat 139 -25

Prices as at 22Aug Source: I-Net Bridge

Our Updated Website

Take a look at our new updated website at: www.offshoreinvesting.co.za

The content is up to date and contains new information about the offshore investment industry.

In addition, clients have access to online valuations through the use of a PIN and password.

Have a look & give us your feedback

Weekly Markets Week 34

Weekly Markets - 25/08/08 – US banking liquidity still worrying analysts even more


The week from a global perspective

U.S. stocks fell, sending the Standard & Poor's 500 Index to its first weekly decline since July, as oil prices climbed and concern grew that the government may bail out Fannie Mae and Freddie Mac.

European stocks ended sharply higher, lifted by a rebound in financial shares on the prospect that U.S. investment bank Lehman Brothers might be bought, while oil eased to around $118 a barrel.

Asian stocks rallied the most in four weeks on Friday, after a poor few days earlier, led by carmakers and airlines, as oil's biggest plunge in four years eased concern that rising energy costs and faster inflation will erode earnings.

Crude oil was little changed after falling the most in three years as BP Plc restarted flows through a Caspian Sea pipeline and as the dollar gained against the euro.

The gains in crude oil and the marked drop in the U.S. currency bolstered precious metals, with gold rising 2.7% as bargain-hunters swooped in to buy the metal.

The US$ rose to a two-year high against Sterling this morning after data last week showed Britain’s economy was stalling, raising prospects of an interest rate cut by the Bank of England.


The week from a South African perspective
The JSE ended slightly lower last week after a better session on Friday inspired by gains in overseas markets, but it came off from its intraday highs as precious metals pulled back along with crude oil prices. After spending most of the day in positive territory in tandem with stronger world markets, South African near-dated futures closed lower on Friday as metal prices retreated along with crude oil prices.
June-delivery platinum jumped 3.8% to close at $1,343 an ounce on the Tokyo Commodity Exchange.
The Rand remained steady around its firmer levels on Friday, in quiet trading conditions ahead of the weekend. The local unit traded between the 7.65 and 7.69 levels for much of the session, holding onto gains made in the previous trading session on Thursday.

The week ahead

Tuesday
- Washington, US Federal Reserve issues the minutes from its 5 August meeting
- Singapore, 40th Association of Southeast Asian Nations meeting of economic ministers

Wednesday
- Pretoria, Stats SA releases July consumer inflation data

Thursday
- Pretoria, Stats SA releases July producer inflation data

Friday
- Pretoria, SA Reserve Bank releases July credit and money supply data
- Pretoria, SA Revenus Service releases July trade account data
- US, Early close (16.00 GMT) of the US fixed income markets ahead of Labour Day

Launch of HEP's Entrepreneur Incubator

Please see below an announcement from our associates, HEP:

Press Release – The HEP Entrepreneur Incubator

4th August 2008



Human Energy Programmes, HEP, announce the launch of The Entrepreneur Incubator Programme this month.



HEP, involved in human development, enables people to grow in all facets of life. HEP offers excellent programmes in

Entrepreneurial and Leadership Coaching, Relationship Mentoring and Health, and Wellness Coaching.

With their motto: Helping You Get Life, they have helped individuals, families and companies make significant and

successful changes. “It has been a long road to this point but we are ready to help tackle the problem of sustainable

job creation in Southern Africa,” says Entrepreneurial Coach, Bruce Wade.



The programme offers a phased development cycle for new starts in the business world. It provides a well-defined

roadmap to success with personal support for the entrepreneur, so as to avoid the pitfalls in small business.



HEP offer a pre-incubator workshops designed for those who are thinking about starting their own business.

For those who have a firm business idea or have already started, HEP also offers the multi-level Incubation Programme

where entrepreneurs can apply for their businesses to be reviewed and then be invited onto the programme at the

appropriate level. On this programme, each business owner will receive Personal Coaching, Business Development

Structures and attend a joint teaching and networking workshop each quarter. This offers the business owner

a defined structure for growth and expansion whilst simultaneously providing a firm foundation.

HEP Incubator includes access to a Crack Squad of professional consultants who are experts in their field,

whether legal, financial, design, marketing or labour. Each Crack Squad member is committed to offering the

same nurturing support to HEP clients at a reduced rate.

Businesses can apply to be reviewed, and if they meet the criteria, will be promoted to the next level of the incubator

system for further growth and structural opportunities.



“We are very excited about having the opportunity to be a part of the new economy in South Africa,” says Bruce,

“We hope to have a positive impact on the lives of many new business owners as they embark on the road to building

successful businesses”.



More information is available from their website www.HEPincubator.co.za

Weekly Markets

Weekly Markets - 03/08/08 – Markets cannot sustain the short recovery

2007/12/31 Index Name 2008/07/27 2008/08/02 Week % YTD % 12 Month Rolling %
13365.87 Dow Jones IA 11,370.69 11,326.32 -0.39 -15.26 -14.08
2674.46 NASDAQComp 2,310.53 2,310.96 0.02 -13.59 -7.98
1478.49 S&P 500 1,257.76 1,260.31 0.20 -14.76 -12.05
854.78 Russell 3000 735.13 737.56 0.33 -13.71 -11.00
8067.32 Frankfurt DAX 6,436.71 6,396.46 -0.63 -20.71 -13.98
6476.90 London FTSE 5,352.60 5,354.70 0.04 -17.33 -13.97
5627.25 Paris CAC 40 4,377.18 4,314.34 -1.44 -23.33 -22.93
15307.78 Tokyo NIK 225 13,334.76 13,094.59 -1.80 -14.46 -22.88
5261.56 ShanghaiComp 2,865.10 2,801.82 -2.21 -46.75 -38.57
29635.00 Jhb ALSI 26,996.00 26,505.00 -1.82 -10.56 -3.90
838.48 Gold $/oz 929.25 910.80 -1.99 8.63 35.84
94.16 Oil $/barrel 123.72 123.34 -0.31 30.99 64.10
6.82 Rand/US$ 7.58 7.26 4.22 -6.45 -2.54
13.58 Rand/Sterling 15.06 14.30 5.05 -5.30 0.90
10.04 Rand/Euro 11.87 11.25 5.22 -12.05 -15.38
1.993 $/Sterling 1.99 1.98 0.50 0.65 2.94
1.473 $/Euro 1.57 1.56 0.96 -5.57 -12.68
112.420 Yen/$ 107.90 108.23 -0.31 3.73 8.30
1.353 Euro/Sterling 1.27 1.27 0.00 6.13 14.19


The week from a global perspective


Concerns inglobal equity markets over slow growth seem to be dominating the market. Yesterday's US GDP data showed that the economy expanded 1.9% qoq between March and June. Although, a respectable figure, it was lower than market expectations (2.3% qoq). The main driver of growth, as expected, has been the export sector, while the fiscal stimulus helped personal consumption to increase 1.5% from the previous quarter. In addition, continued weakness in the labour market will still weigh on the economy.

On Wednesday 30th July, President Bush signed into law a sweeping rescue package aimed at resurrecting the US housing market from its worst slump since the Great Depression and stabilizing the two largest mortgage finance companies. The new law launches a $300 billion government initiative to refinance troubled mortgages, and boosts oversight of Fannie Mae and Freddie Mac, which own or guarantee almost half the country's $12 trillion in home mortgage debt.

The Fed has extended the Primary Dealer Credit Facility, the access it granted investment banks to its discount window emergency cash around the time of the Bear Stearns rescue, until Jan. 30. It has extended another credit, called the Term Securities Lending Facility and which is also designed for investment banks, by the same amount of time. In addition, it is offering to auction options on the TSLF around tricky funding periods like quarter-end, and is introducing an 84-day Term Auction Facility to compliment an existing 28-day TAF, and has increased its swap line with the European Central Bank. All of these liquidity measures announced on Wednesday 30th July continue the process of healing the severely injured global credit markets.

In Europe, the ECB continues to face a dilemma as it deals with a slowing economy and higher inflation. This past week economic confidence, a leading indicator for economic growth, dropped a staggering 5 points in July to levels not seen since 2002. While prices continued to increase in July, even as oil prices stabilized, inflation reached a new high at 4.1%.

The US$ fell slightly from near a five-week high against the Euro this morning as oil prices jumped above $126 a barrel, surrendering some of the gains scored last week after data showed US companies cutting fewer workers than expected.

Crude oil prices rose on renewed tensions over Iran's nuclear program and strong refiner buying in gasoline.



The week from a South African perspective

The JSE ended deep in the red following similar drops in overseas markets, with miners among the worst causalities on tumbling commodity prices. South African near-dated futures plummeted as a combination of a strong rand, a downturn on Wall Street and a slide in the platinum price conspired to drag the market lower.
Gold traded little changed above $900 in Asia this morning as the US$ held near a one-month high against the Euro and Yen, while crude oil prices rose, boosting demand for haven investments.

Platinum group metals got knocked to their lowest levels in half a year as a massive quarterly loss reported by General Motors added to worries about the auto sector that were already pulling down prices.
The Rand continued to firm against the US$ on Friday, hitting a new 6-month high around the R7.26 level, boosted by a strong performance by emerging market currencies and investor appetite for risk. The likelihood of it maintaining these levels is very low with equity market sentiment turning negative again. As far as the headlines over the weekend about Thabo Mbeki’s involvement in bribes during the arms deal, surely this can only weaken the local currency? That said, foreign investors don’t seem too perturbed about this sort of news, all they seem to act on is news which could lead to them losing their own money.
South African bonds were firmer late afternoon on Friday, buoyed by the firmer Rand and some short covering.

The week ahead

Monday
- Johannesburg, NAAMSA releases July new vehicle sales data

Tuesday
- Washington, US Fed holds its one day meeting on interest rates
- Sydney, Reserve Bank of Australia board meeting and interest rate decision

Wednesday
- Johannesburg, COSATU plans a national strike against job cuts related to power shortages & against high fuel and food costs!?

Thursday
- Pretoria, Stats SA releases June manufacturing data
- Pretoria, SA Reserve Bank releases July reserves data
- London, Bank of England monetary policy committee announces interest rate decision
- Frankfurt, ECB governing council meeting followed by interest rate announcement

Friday
- Beijing, The Olympic Games begin (to 24 August)