Welcome to Matters of Mind (MM)

June 2024 Edition

Pass the Baton

“The idiom ‘pass the baton’ resonates beyond its athletic origins, symbolizing the universal human experience of transition and legacy. It’s a powerful metaphor for the continuation of efforts, values, and leadership.” Dr Yuexin Rachel Lin, Lecturer in International History, University of Leeds reflects.

ASSA’s latest CEO of over 11 years, Mike McDougall, left ASSA on 30 June and will be taking over the post of Director of Learning at the IFoA making way for ASSA’s newly appointed CEO Imran Mohammed who will relinquish his current post as Education Executive for ASSA. With such a strong relationship with its original parent institution in the UK, ASSA and its members will benefit equally from Mike’s move to the IFoA and from Imran’s instatement as CEO for ASSA.  We wish them both well.  

MM invites you to digest and critique this month’s collection of articles and use the reports cited as research material. We also encourage you to reflect personally on your year thus far and your general wellbeing in the About YOU section. We invite you to invest in your emotional wellbeing by joining the ASSA Personal Development (APD) Winter Programme taking place on 17 July 2024 online.

Enjoy!

MM Editorial Team

Economic matters

Markets rally on Ramaphosa 2.0 with Cabinet Announcement as the next key event

The week in perspective (ending 21 June)

Following some hesitant gains ahead of the election and then struggling to find direction afterwards, markets piled into SA assets in the weeks after the election. Positive local economic data played along, and global dynamics did not derail the optimism towards SA. The rand strengthened below R18/$ for the first time since August 2023, stocks surged, and bond yields declined (which is a good thing) amid strong demand for local bonds.

This is a weekly review from the Bureau for Economic Research at Stellenbosh (BER) well worth reading. The page covers local and international economic indicators. 6-8min read

Financial Services Industry

Constitutional Court’s ruling in tax dispute a relief for SA multinationals

Coronation Fund Managers on Friday withdrew its cautionary announcement to shareholders after the Constitutional Court ruled in its favour in its tax dispute with the South African Revenue Service (SARS).

The article gives the history and a fairly comprehensive summary of the court case as it unfolded. 8min read

Summarised responses to the FSCA’s Discussion Paper on a Framework for Unclaimed Financial Assets in South Africa.

In 2022, the Financial Sector Conduct Authority (FSCA) published the Discussion Paper on a Framework for Unclaimed Financial Assets in South Africa (the Discussion Paper) and invited public comment on it.

The two legal notes below summarise the comments received, set out the FSCA’s response to key themes, and outline the FSCA’s next steps for advancing the recommendations outlined in the Discussion Paper.

Legal note: May 2024 (part 1) – a framework for unclaimed financial assets in South Africa

6min read

Legal note: June 2024 (part 2) - a framework for unclaimed financial assets in South Africa

6min read

For the full version you can access the FSCA’s report here

Life Insurance

Advisers, planners should know their worth

The day-to-day compliance and operational challenges that modern financial advice practices have to overcome can make it difficult for financial advisers and financial planners to appreciate their true worth. Worth is defined by Oxford Languages as ‘the level at which someone or something deserves to be valued or rated’. Many make the mistake of aligning worth with remuneration; but in the financial advice context, it makes more sense to think of your worth in terms of the value you add to society through the activity of financial advising.

This well written article brings “worth” into focus.  5min read

Critical illness: Momentum Life Insurance urges comprehensive coverage planning

Momentum Life Insurance’s 2023 claim statistics highlight the glaring gap in critical illness cover among South Africans.

Joretha Bothma, the head of product development, underwriting, and claims at Momentum Life Insurance, reported that 57% of all death benefit claims in 2023 were due to cardiac and cancer events. However, less than 81% of these claimants had any Myriad critical illness cover.

A direct urge for financial advisers to advise comprehensive plans for clients, similar to the article above. 5min read

Understanding the impact of funding patterns on the sustainability of your clients’ cover 

One of the levers that financial advisers have at their disposal to address the affordability of cover is premium funding patterns. However, clients and financial advisers need to weigh up both the short-term affordability as well as long-term sustainability of premiums, as there is essentially a trade-off between initial premium affordability and the long-term affordability of cover and premium increases.

A great way to pick apart traditional ways of presenting a life insurance product is to highlight its sustainability shortcomings.  6min read

Key highlights from Sanlam Risk and Savings 2023 claim statistics

The highlights tell us a lot about how people are taking care of their health through policies – or not. Some interesting facts which help us to become more alert to the risks on our wellbeing. 4min read

General Insurance

Beyond the Usual Suspects

While cyber threats, climate change, and pandemics are critical emerging risks, have they captured too much of our collective attention? Insurers must be aware of many other evolving threats.

Please read this short 2.5min note on LinkedIn, it cites the Swiss Re SONAR report which you can download here and provides the graphic from the CRO Forum's Emerging Risks Initiative which you can also download here. The IAIS Global Market Report is reported to complete the picture if emerging risks is your interest.

Health Insurance

Investigation calls into question the narratives used to support NHI

The BHF’s managing director, Dr Katlego Mothudi, says healthcare is more accurately described as a “social good”. A public good, like military services, is one that the government must provide and from which no one can be excluded, regardless of payment. Although healthcare is essential, it is not feasible to provide it as a public good.

The BHF, concerned about the numerous misconceptions propagated by government representatives since 2009, commissioned Professor Alex van den Heever, chair of Social Security Systems Administration and Management Studies at the Wits School of Governance, to investigate these claims.

This article highlights how assertions need to be supported by fact. Fact, however, can be undermined by the art of persuasion through choice of words and an influential speaker.  8min read

Consolidated legal challenges to NHI Act will have more clout

The controversial National Health Insurance Act, which was signed into law by President Cyril Ramaphosa two weeks before the elections, and now faces several legal challenges, was the subject of much discussion at the Healthcare Funders’ Association symposium on Wednesday. (19 June)

The most recent news on the NHI (at time of publication). 2.5min read

Episode 2 - CEO of Discovery Health, Ron Whelan & EY-Parthenon map South Africa’s health care future

In the second episode of EY-Parthenon’s Real-World Strategy Dialogues – a podcast series by EY Parthenon – Discovery Health CEO Dr Ron Whelan discusses the future of healthcare in South Africa.

Whelan is a trained doctor with an MBA from the University of Witwatersrand and boasts extensive experience in the healthcare industry.

He is also the co-founder of Healthforce, a leading telemedicine player in South Africa.

Whelan begins the interview by explaining how he expects the health industry to evolve in the coming years, due to the increasing prevalence of chronic diseases.

Podcast of 21:40

Banking

Banking jobs bloodbath: Why South Africa isn’t too fussed

A new Citigroup report shows that around half of all banking jobs are at risk of being lost to automation and the advent of artificial intelligence.

3min read

The research report cited is titled ‘AI in Finance: Bot, Bank & Beyond‘. It is a valuable resource if you are doing research on the topic and you can access it here. 124 pages with a full glossary.

Mama Money taps WhatsApp for cross-border payments

South African-based cross-border money transfer operator Mama Money has joined forces with Access Bank and bank card issuer Paymentology, to launch a bank card service that uses WhatsApp banking.

Is Mama Money a possible route for money laundering? 2.5min read

Bullish on Gold

After tracking the 10-year US Treasury Inflation-linked Bond, also known as TIPS, for 16 years, gold’s correlation with the bond broke down in the latter half of 2022.

Read more on how global events dictated the sequence of gold decoupling from TIPS and yet there is demand for gold in a current bullish market. 4min read

Top-rated Shariah fund bets on South Africa's recovery

Green shoots are starting to show in many of South Africa’s struggling economic sectors. Electricity supply has improved, logistical bottlenecks at the country’s ports are being addressed and rail freight may improve in the not-too-distant future.

A positive 3.5min read

Retirement / Pensions

Failure to act timeously over arrear contributions places members’ benefits at risk

Addressing the Pension Lawyers Association conference in Cape Town in early April, Lukhaimane said about 83% of the complaints finalised by her office concern withdrawal benefits and compliance with section 13A of the Pension Funds Act (PFA) – the payment of contributions by employers.

3.5min read

FSCA to launch retirement fund education campaign

The FSCA plans to roll out a nationwide “Know Your Rights” campaign to educate retirement fund members, trustees, and the public about their rights and responsibilities regarding retirement fund contributions and the two-pot retirement system.

3min read

Two-pot retirement system: 20% will have R0 to withdraw from their funds

Natasha Huggett-Henchie, consulting actuary and member of the Actuarial Society of South Africa (ASSA) Retirement Matters Committee, encourages retirement fund members to start preparing for the implementation of the two-pot retirement system by ensuring that they can access their most recent retirement benefit statements.

Informative. 3min read

Survey: More than half of South Africa doesn’t know how to plan for retirement

A Just SA survey reveals that respondents tend to underestimate their longevity and overestimate their health in retirement.

3min read

About YOU

Creative flow: what’s going on inside the brain when everything just clicks – podcast

If you’ve ever experienced a state of creative flow, perhaps when writing, playing music, or even gardening, you’ll know that it feels like everything just clicks into place. But what is actually happening inside the brain?

In this episode of The Conversation Weekly podcast, we speak to a neuroscientist who scanned the brains of jazz musicians as they were improvising, and revealed the secret ingredients need to achieve a state of flow.