Transcript Voluntary investment Products

Voluntary Investment Product (VIP)
March 2012
General
What is the VIP?
Flexible product where investors can invest discretionary
funds (after tax money)
Gives investors access to a wide variety of UTs, MMUT
(PSG) and White Label funds via the LISP platform
VIP can only invest in UTs, MMUT (PSG) and White Label
Funds, not segregated mandates or PSP
Who may invest?
Individuals
Companies
Trusts
Retirement Funds
Non-taxable organizations
Where does it fit in?
Platform Offering
Investment
Voluntary
Investment
Pre-retirement
Endowment
Retirement
Annuity
Post-retirement
Preservation
Funds
Retirement builder
Capital Protector
Various Unit Trusts as per Portfolio Selection List
Living
Annuity
Pricing
Net Asset Value used (NAV)
Not the four fund approach as with the life funds
Since we are a LISP, we will make use of NAV pricing for most
of our investments
Where a fund does not have unit trust pricing, life pricing (four
fund approach) will be used according to the tax classification
(available to RA, ELLA, Pres Funds and Endowments)
If there is no unit trust pricing set up or available for an
instrument, a client may not invest in that instrument through
the VIP
Investments
Lump sum investment
Minimum R50 000 (R20 000 for PSG Konsult & PSG Online)
Can be phased in – daily/weekly/monthly phase ins
Recurring investments
Minimum R500 monthly
Monthly, quarterly, half-yearly, yearly
Inflation rate CPI / 5% / 10% / 15% / 20% per annum
Collection date: Previously only on the 1st of the month, now any day
Cheque deposit, EFT, Direct Debit (max R500 000 per day)
Once all requirements received and submitted, t+1 for
investment to settle
Documents Needed
PSG Application form (fully completed)
Certified copy of client’s ID
Certified copy of client’s proof of address (less than three
months)
Certified copy of client’s proof of bank details (less than three
months)
Proof of deposit (match to unallocated spreadsheet)
Investment Options
Unit Trusts
Within the VIP – subject to market movements
Money Market
We only offer PSG Money Market Fund (some clients may be in other
Money Market funds due to the acquisition of the Equinox platform, but they
are not open for investments)
Transfers
Unit Transfer from another LISP (same fund, same class)
Unit Transfer from a MANCO (same fund, same class)
Switches
Switch form, fully completed and signed
Where a standing instruction exists on the client’s investment,
confirm with the client that it will follow the switch
t+4 (this can differ based on the type of source and
destination fund as well as possible liquidity constraints in the
source fund)
Internal Switch – Switching of funds at the same Manco
External Switch - Switching of funds between different
Manco’s (i.e Cash flow) sell units with the one Manco and buy
units with another Manco
Loans and Surrenders
No loans or surrenders
Client may repurchase at any time, no restriction
Maturity
There is no term linked to a VIP, hence no maturity date
Client may withdraw at any time
Withdrawals
No limit on time or frequency
Lump-sum or recurring withdrawals
Recurring: weekly, monthly, quarterly, half-yearly and yearly
Works like an annuity, but it is not an annuity
Escalation: same intervals as above
Escalation percentage may be selected
End date may be stated (client may cancel at any time)
Payment date may be any day of the month (consider that the
income has to raised on T-5
Capital Gains Tax
The LISP does not pay tax on behalf of a VIP investor
Each investor will pay at his/her own marginal rate, but it is
that investor’s responsibility to include the CGT in their tax
return, we merely report by means of an IT3c
WAC is used as base cost to calculate CGT on unit disposals
Example:
Purchase 100 units in UT1 at a price of R1 in October 2010 – WAC = 1 (100/1)
Purchase 100 units in UT1 at a price of R2 in December 2011
WAC of all units is now (100*1 + 100*2)/200 = R1.50
Dispose of 100 units at price of R3 in January 2012
= (100*3 – 100*1.5) = R150 – I.e. realised gain of R150, investor to include in
tax return
Dividend Withholding Tax
Current rate of 15% on dividends (STC was 10%)
Some entities may qualify for exemption - DTD(EX)
Foreign investors may qualify for a reduced rate – DTD (RR)
It is our responsibility to pay to SARS, hence clients have to
let us know if they qualify (we do not give recommendations
or advice in terms of DWT)
Income tax
Income tax is payable on the portion of the interest income
paid by UTs and MMUTs
Tax on interest income, rental income, foreign sources of
income, dividends from property unit trusts
Standing Instructions Change
Static Details Change Form OR
Letter from client instructing change (signed by client or mandated
broker)
Debit order amount/frequency/escalation
Client can switch and confirm how the allocation of the debit
order should change, if required
Should a regular contribution default for 3 months
consecutively, the investment will be treated as “paid up”. The
investor may choose to resume payments by informing us in
writing.
Static Details Change
Address / Contact details change
Residential Address
Signed and completed Change of Static Details form AND
Certified proof residential address not older than three months (FICA)
Postal Address
Signed and completed Change of Static Details form OR
Letter from client instructing change
Contact Details (email / tel / cell / fax)
Signed and completed Change of Static Details form OR
Original Letter from client instructing change
Static Details Change
Bank Details Change
Signed and completed Change of Static Details form AND
Certified proof of bank details (less than 3 months old)
NOTE: Internet bank statements will not be accepted
Static Details Change
Beneficiary Changes
There are no beneficiaries loaded on a VIP
Static Details Change
ID Number or Name Changes
Signed and completed Change of Static Details form AND
Certified copy of marriage certificate (if surname change)
Certified copy of ID with three specimen signatures if the
client’s signature changed
Cession
Partial or full cession allowed
Investor’s responsibility to manage the cession
We will keep record of the cession on the platform
Documents Needed for Outright Cession
Signed and completed Cession Registration Form
May result in a Capital Gains Tax event
Certified FICA for Cedent (if not on file)
Documents for Cessionary
– Certified copy of Identity Document
– Certified copy of physical address, not older than 3 months
– Bank details, not older than 3 months
– SARS tax number
Documents needed for collateral
Signed and completed Cession Registration Form
Certified FICA docs for Cessionary, if not on file
Certified copy of letter (on letterhead) from Institution /
Cessionary
Death Claim
There are no beneficiaries loaded on a VIP
We will act on instructions received from the executor of the
deceased estate
Death Claim
Documents Required:
Certified copy of death certificate
Post mortem report (if unnatural death)
Certified copy of deceased’s ID
Certified copy of letter of Executorship
Signed and completed Claim Application & Discharge form
Certified copy of marriage certificate (if married within community of property
before 1984 or anti-nuptial contract with accrual)
Certified proof of bank details (less than 3 months old) OR cancelled cheque
Payment will only be made to the Estate’s bank account
Cut offs for processing
Any instruction for processing has to be batched and
submitted to Admin before 9:00 (Money Market & Life
portfolios) all other funds are before11:00
Ensure that your broker actually SENDS it well within cut off
so that there is sufficient time for batching and submission to
Admin
Recurring Contribution: 3 business days prior to collection
** Business policy will be to submit instructions as and when received – real
time processing. Do not hold back on instructions if the cut off for the day
was missed **
Tax
All taxes levied in the hand of the investor
We don’t pay tax on behalf of the client (four fund approach)
IT3(b) for distributions
IT3(c) for capital gains/losses
Each investor paying according to his/her marginal rate
Dividend Withholding Tax 15%
Legislation
Collective Investment Schemes Act
Exchange Control Regulations
Income Tax Act
Financial Intelligence Centre Act (FICA)
Financial Intermediary and Advisory Services Act (FAIS)
Fees
IFA initial fee 0% - 5% excl VAT
IFA ongoing fee 0% - 1% excl VAT
No initial platform fee
Ongoing platform fee
– PSG – before 1 Aug 2011 = sliding scale
– PSG – after 1 Aug 2011
= 0.4% for Konsult & Online
0.5% for Retail
Neg for Best of Breed
LESS REBATES
Fax and E-mail Indemnity
Faxed instructions will be accepted, FICA docs have to be
certified
Where an advisor did not certify FICA docs, we will check if
Fax and E-mail Indemnity is on file (excluding I.D.)
If a client signed the F/E Indemnity in the application form/
other transaction form, we will accept instructions via e-mail
Disclaimer
The information contained in this document is correct at time
of the presentation. All figures and points must be verified
prior to any business dealings due to the dynamic nature of
legal and financial environments. Though every effort is made
to ensure the accuracy of the information contained herein,
the author cannot guarantee the validity and or current
information in future circumstance when legislation is
adapted.
The author accepts no responsibility for the use of validated
information and the misuse of current information. Individuals
misusing current information or using outdated information will
be personally liable for any damages/consequences incurred.
PSG Asset Management Administration Services Limited
reserves the right to adapt provisions as set out in this
presentation where applicable legislation and practices
change. PSG Asset Management Administration Services
Limited is an approved financial services provider.