Welcome to Matters of Mind

Economic matters

Ditch this dangerous mindset

Many affluent South Africans believe anyone with a job is lucky to have one. But such an attitude damages our chances of creating a more just and equitable society.

An opinion piece which asks us to be realistic about minimum wage and to be honest about how we view outsourced labour. 3.5min read

Living wage vs minimum wage: How to address pay disparity and reduce working poverty

Employment is generally considered the most tangible way to eradicate poverty. However, this is not always the case when the cost of living is so high that minimum wages are insufficient to cover basic needs, even with the most recent increase that came into effect in March this year.

3min read

SA’s economic revival: Calls for bold tax reforms

In an interview with BizNews, Magnus Heystek urges South Africa to embrace bold economic reforms, suggesting radical tax breaks as a key strategy to rejuvenate the struggling economy. Heystek argues that by adopting innovative policies, such as offering flat-rate taxes to attract high-net-worth individuals and businesses, South Africa could significantly boost its financial stability and growth prospects.

This YouTube interview notes optimism about the new government which could be used to its advantage. 20min video

Hope for an interest rate surprise in South Africa

For the first time this year, economists are divided over whether South Africa’s central bank will continue to leave interest rates at a 2009 high or loosen them.

Can our new GNU change sentiment about SA’s stability? 2.5min read

Financial Services Industry

A long time coming – the Insurance Capital Standard

Following the 2008 global financial crisis, the International Association of Insurance Supervisors (IAIS) received a mandate from the Financial Stability Board and G20 leaders to develop a Common Framework for the supervision of Internationally Active Insurance Groups (IAIGs). IAIGs are designated by their group-wide supervisors based on size and level of activity; they are essentially large international insurance groups. Currently, 57 IAIGs have been publicly disclosed by their group-wide supervisors.

An important deep read. Find out where the Insurance Capital Standard fits into the Common Framework, its key features, similarities with Solvency II and how countries may adopt or adjust it to cover their needs. 10min read

Past sins come back to haunt microlenders, with Capitec on the front line

A movement to claim potentially hundreds of millions of rands from the microlending industry may soon reach an inflection point as Capitec Bank defends a restitution claim from the victim of an allegedly fraudulent garnishee order.

This is a long read but it also illustrates the enormity and complexity of the problem of garnishee orders and the more recent “debt rehabilitation” trend. 10min read

Guardrisk hunts for deals as Momentum rejigs strategy
Financial services group Momentum has indicated that work is under way to beef up Guardrisk with acquisitions and possible international expansion as part of the group’s new strategy that aims to push up its earnings to R7bn by 2027 from R4.8bn now.

A Business Day article which needs to be accessed via your institution’s library membership if you do not have a subscription.

Scientists slam Stats SA’s 2022 census as ‘work of fiction’

Scientists have torn into the government’s latest census, saying it is so flawed it cannot be relied on for allocating budgets and resources or monitoring the impact of key programmes such as childhood immunisation.

A very important 2.5min read.

Life Insurance

No annual premium increases on our new life product, says Capitec

Life insurance without automatic annual premium increases was one of the selling points touted by Capitec Bank when it officially launched its new life cover product on Tuesday.

This article makes one think about transparency with clients. What do you think about the product versus the comment made by a reader? 3min read

The real cost of insurance fraud: how it happens, how it’s detected and why honesty is – quite literally – the best policy

This article also looks at fraud in health insurance. How can those seeking insurance be convinced to be truthful? 8min read

More locals are buying life insurance that pays out in dollars, says Discovery

Discovery Life anticipates its dollar life products will account for about 10% of its total book’s annual premium income by 2025, as more South Africans diversify their risk cover to include life insurance that pays out in dollars.

This article can be accessed via a Business Live subscription. If you do not have a subscription, you may find the article below of interest as it describes Discovery Life’s dollar life products.

First and only life insurance that pays you out in dollars

4min read

General Insurance

Net zero: whose job is it anyway?

It looks increasingly unlikely that net-zero carbon budgets will limit Earth’s temperature rise to 1.5°C above pre-industrial levels and we may already be committed to more warming than is assumed. Could actuarial principles play a valuable role here? 

This is a must read for all. If you read the report below from the March edition of MM, you will be able to critique the opinion of Sandy Trust. 8min read

Climate Scorpion - the sting is in the tail

'Climate Scorpion - the sting is in the tail' is the latest in a series of climate risk reports produced by the Institute and Faculty of Actuaries, which looks at how 'planetary solvency' and actuarial expertise can help answer these questions, and both tackle climate change and its impact.

A highly informative 35 page report

Court to decide insurance dispute after construction mafia raid

This is a contentious issue which has been normalised by lack of monitoring as criminal activity, adding to the perception that money laundering is easy in SA. 3min read

You may want to read the article below to broaden your view of the construction mafia.

Macpherson aims to turn SA into a construction site and declares war on ‘construction mafia’

3min read

Health Insurance

National Health Insurance: Eight things Motsoaledi and Phaahla have in common

Health Minister Aaron Motsoaledi faces a massive challenge: preparing to roll out a controversial NHI Act by a government of which only four out of 11 governing parties outright support the legislation.

This is an opinion piece which provides insight with analysis of historical political performance of both Motsoaledi and Phaala. 8min read

Judge rules health legislation unconstitutional in ‘major blow to NHI idea’

Health legislation that would require doctors and health practitioners to obtain a ‘certificate of need’ before being allowed to practise in a particular area has been declared unconstitutional by the high court.

Interesting article bringing our attention to the NHI and its impact on doctors wishing to open a practice. See response below from the Minister himself. 4min read

Motsoaledi slams response to medical certificates of need high court ruling as ‘propaganda’ against NHI

Minister of Health, Dr Aaron Motsoaledi, said he was deeply concerned about the high court ruling declaring a part of the National Health Act unconstitutional. The relevant sections deal with plans by the government to regulate where doctors can work and hospitals can operate. Even more so, Motsoaledi said, he was also disturbed by attempts to link this to the National Health Insurance.

Please read both articles to gain a broader perspective of the issues. 3min read

BestMed Medical Scheme reports growth at its AGM

DESPITE the challenges in the healthcare industry, including higher claims ratios, increasing costs, and declining industry reserves accumulated during the onset of the Covid-19 pandemic, Bestmed Medical Scheme continues to demonstrate resilience and growth – as confirmed at its 60^th Annual General Meeting (AGM) held virtually, recently.

2min read

Banking

Banks ramp up spending on artificial intelligence to boost efficiency

Banking institutions have been big spenders on tech and they are seeing the results of employing artificial intelligence not only to improve their clients’ experiences, but their staff’s work too.

3min read

Investments

South African bonds lead global returns amid political stability

South Africa’s local-currency bonds have outperformed global peers, returning 9.3% in dollar terms this year. The success is driven by political stability post-election, improved fiscal outlook, and a halt in power cuts. Investors are optimistic, with yields expected to fall further. High interest rates and positive inflation trends bolster the appeal, drawing significant foreign investment.

3min read

Banks’ outlook improves as cabinet jitters subside

South African bank stocks have performed strongly over the past month as investor confidence returned following the uncertainty over May’s elections.

3min read

Government doubles down on tapping into pension funds

The South African government is weighing its options regarding revising legislation to allow it to tap into pension funds and other asset managers to fund industrial policy projects.

Alternative approaches are suggested. What do you think of them? 3.5min read

Retirement / Pensions

Two-Pot legal hurdle crossed, now the race to prepare is on - Pension Funds Amendment Bill signed into law today 21 July 2024

… “while providing welcome relief for those in crisis, the primary intent of Two-Pot is to encourage - and reward - South Africans to save more for retirement. And keep those savings invested - and untouched - until retirement age,” concludes Guy Chennells, Chief Commercial Officer of Discovery Corporate and Employee Benefits.

Comprehensive cover of the subject and some important questions raised. 8min read

Proposed conditions for legacy RAs to be exempted from two-pot system

So-called legacy retirement annuity (RA) funds will have to meet a long list of conditions to qualify for an exemption from the two-pot retirement system.

3min read

The tricky job of managing a living annuity through retirement

The article above includes a wide range of opinions from a number of experts including Andrew Davison, chairman of the Investments Committee of the Actuarial Society of South Africa (ASSA).  5min read.

Living annuities require dynamic management to preserve your capital

A well written and researched article by Andrew Davison using 75 retirees over a span of decades. 5min read

About YOU

Transactional vs. Transformational Leaders

These divergent approaches can enhance leadership effectiveness if they are both used appropriately but not exclusively. This heads up is not only for those in leadership, but also for effective self-mastery. Identify your comfort zone but do not stay there. 2min read

By revealing their mental health struggles, pro athletes are scoring with fans

In 2009, The New York Times published an article quoting a psychiatrist who doubted that a professional baseball player could suffer from social anxiety disorder.

A lot has changed since 2009. There’s a growing focus on ensuring that professional athletes have access to mental health support.

As an aspiring actuary you too need to respect your mental health. 5min read

The APD Winter Programme 17 July 2024

The WP hosted a panel discussion on “Wellbeing as a measure of success in the workplace” featuring insights from Susan Atkinson, Wendy Naidoo, Thato Pule and Soshan Soobramoney. Hosted by Dr Sharon Munyaka, this discussion explored the critical role of well-being in achieving workplace success. It was from 14:00 – 15:00.

You can access the day’s recording here using the passcode: p7@E$7WZ