10 Dec SwissFin Newsletter December 2014
It is this time of the year again – Christmas and the summer holidays are just around the corner. Our team wishes you a great time with your family, friends and all the best for 2015. Make sure you travel safely on our busy roads during the festive season.
This is the last newsletter for 2014 and we trust you find the information we want to share with you useful.
As usual, this newsletter can be viewed under https://www.swissfin.co.za/newsletters/swissfin-newsletter-december-2014/
Enjoy the reading, with best regards,
Your SwissFin – Team
- Interest rates: Bank deposits, insurance plans, tax-free investment amounts and our offshore model portfolios
- Collapse of African Bank
- Mini Budget 2014 – are taxes going to rise?
- Moody’s downgrades SA’s rating
2. SWISS BANKING
3. SHORT-TERM INSURANCE
- Guesthouse owners, are you covered for Ebola booking cancellations?
- Leaking water pipes and pinhole damages – property owners be aware!
- Execuline, BnB Sure, MUA and Vantage Insurance increase premiums
- SASRIA cover – does it include extensions?
- The great geyser challenge
- Vehicles for R 8.5 Bio stolen every year in SA
- Cars stolen whilst being serviced at dealerships
- Do you own an apartment in a body corporate?
4. HEALTH CARE COVER
- Discovery Health changes for 2015
- Please take out Gap Cover
- New Bupa Global insurance premiums as from October 2014
5. LIFE INSURANCE
- Department of Home Affairs still in disarray
- Birth certificates for travelling children postponed to June 2015
- Do not leave SA without a valid permit
- Number of BRICS tourists visiting SA down
- Which country has got the lowest travelling costs?
- Western Cape are SA’s best drivers
- Unicef: Over one third of SA’s population under 18 by next year
- Life expectancy the highest in the Western Cape
- Crime statistics South Africa
8. SWISSFIN MATTERS
- SwissFin at German School Bazar
- One Christmas box for one Child
- Our office hours over the festive season
- Advertising opportunity in our newsletter
- We value your comment
SwissFin offers the following rates as of November 2014:
Bank Deposits ››
- Money Market
- 12 Months
Please contact our office for more information. Conditions apply.
Insurance Plans: “Guaranteed growth plans” (5 year term) ››
- Gross Yield
- Taxes Payable
Tax-free interest income – maximum investment amounts ››
R 1’367’000 Mio for taxpayers under the age of 65
R 2’103’000 Mio for taxpayers between the age of 65 and 75
R 2’287’000 Mio for taxpayers over the age of 75
Underlying assumptions: 6.0% effective interest. Couples married in community of property can double these amounts.
SwissFin offshore model portfolios ››
The annualized performance (before costs) of our balanced portfolios is as follows:
- GBP STERLING
- 1 Year
- 7.65% p.a.
- 8.92% p.a.
- 4.92% p.a.
- 4.74% p.a.
- 3 Years
- 7.46% p.a.
- 8.54% p.a.
- 7.06% p.a.
- 6.97% p.a.
- 8 Years
- 2.78% p.a.
- 4.64% p.a.
- 6.42% p.a.
- 5.32% p.a.
Collapse of African Bank ››
The SA banking sector was under pressure with the collapse of the country’s largest unsecured lender in August 2014, African Bank Investments Limited (ABIL). The bank, which needed an injection of R 8.5 Bio., was put under curatorship by the SA Reserve Bank.
The swift reaction of the Reserve Bank gave confidence in the local banking system and reduced losses for ABIL shareholders.
Many other local banks were affected by the collapse, as they were holding shares of ABIL in their funds in which clients were invested. Luckily, the exposure of most of those funds was very small. The 15 largest money market portfolios invested in ABIL showed an average of 1.9% shareholding in ABIL.
The Reserve Bank is guaranteeing 90% of the debt which means that investors have to write off 10%. Clients invested in other bank’s funds have therefore only suffered a minimal reduction in yield.
The steps taken by the Reserve Bank are commendable, and the World Economic Forum ranks South African’s banking development system in third place. Therefore investors do not have any reason to panic.
Mini Budget 2014 – are taxes going to rise? ››
Our new Finance Minister, Mr Nhlanhla Nene, presented the medium-term budget on the 22 October 2014.
The budget that was tabled in February this year estimated a GDP growth of 2.7%. Unfortunately, the revised estimate came in at 1.4% – the worst figure since the recession in 2009. The shrinkage is mainly due to the economic slowdown in Europe and China, but inefficiencies in the local development such as labour unrests, energy constraints, lower commodity prices, skills shortages etc. have added to the problem. By 2017, GDP growth is expected to reach 3% again.
The projected tax revenue for the 2015 year is R 10,0 Bio. below budget and the expected budget deficit is increasing to 4.1% of GDP – a figure that is far too high.
Mr. Nene mentioned that South Africa has reached a turning point and he wants to consolidate fiscal spending with the following measures:
- Government spending will be reduced by R 25,0 Bio. over the next two years.
- Vacant government post will be frozen which will save Billions of Rands.
- Freeze government budget for non-essential goods, services and external consultants.
- Proposals will be tabled in the 2015 Budget in February to generate additional income of R 27 Bio.
- Parastatals will be closer looked at and if funding is necessary, non-strategic assets of the government will be sold, or partnership with private investors will be sought. This way the budget will not be affected.
Whilst the Government has made the right decision to cut spending, it might be too little too late. The budget deficit is too large and additional revenue has to come from somewhere.
Mr. Nene’s comment “Let me be absolutely clear: We will not balance the budget on the backs of the poor” can be interpreted in two ways: He does not want to cut funds for service delivery – or the wealthier taxpayer will have to fund the deficit.
Tax hikes are certainly not off the table and the next Budget in February 2015 will give us more clarity if income taxes or the VAT rate will be increased.
Moody’s downgrades SA’s rating ››
Ratings agency Moody’s downgraded South Africa’s Baa1 sovereign debt rating by one notch to Baa2 early November 2014, and changed the outlook from negative to stable.
The ratings agency noted in its outlook revision that there were “poor medium-term growth prospects due to structural weaknesses, including ongoing energy shortages as well as rising interest rates”.
Moody’s however said policymakers in Africa’s second largest but most developed economy had shown “commitment to reining in government debt growth over the medium term and the broad political support for a macroeconomic strategy”. That earned the country the improved outlook to stable status.
2. SWISS BANKING
End of banking secrecy for Swiss citizens? ››
The Swiss Federal Government wants an automatic exchange of information with foreign countries as from 2018. The proposed exchange, aimed at persons residing in Switzerland holding assets abroad, will no longer render the private protection that is currently in place.
This follows the abolishment of banking secrecy for foreigners in 2009.
The reason for the proposal is the introduction of the automatic information exchange (AIA) in the European Union. The finance ministers of the EU States signed the declaration in October 2014, which will see the implementation of the AIA as from 2017.
The Swiss Government wants to follow suit with the introduction in 2018. It is estimated that a correct taxation of such assets could increase the tax revenue to the Swiss Government by CHF 1.15 Bio.
3. SHORT-TERM INSURANCE
Guesthouse owners, are you covered for Ebola booking cancellations? ››
We recently obtained an enquiry from a guesthouse owner in South Africa, who had received a booking cancellation from an overseas visitor due to the Ebola virus outbreak in Africa (Africa is one country don’t-you-know).
Whilst the insured did have a Business Interruption cover on the policy, the event was not covered, as there was no Ebola at the insured’s premises or close vicinity.
We examined all guesthouse insurance policies with the following result:
- There is no cover if a booking is cancelled and there is no Ebola Virus at the insured’s premises.
- Some policies provide additional cover within 50km radius of the insured’s premises.
- One policy provides cover if the guests could not leave an area due to the virus, and therefore missing the booking in SA.
We recommend all guesthouse owners to review their booking/cancellation policy as in all cases, it would need to be proven that the rooms could not be made available to new guests.
Leaking water pipes and pinhole damages – property owners be aware! ››
Many residents on the West Coast in Cape Town are sitting on a potential disastrous problem:
During the property boom phase about 12 years ago, many builders/developers used cheap and inferior water piping systems for new homes. The water on the West Coast has got a higher alkaline level (PH > 7) than average and causes the pipes to slowly deteriorate. The effect is tiny corrosion holes in the piping (pinholes), which releases water gradually and causes water damage to homes.
All insurance policies exclude damage from corrosion, gradual wear and tear, deterioration etc. and the repair of such leaks is therefore not covered. Some insurance policies will pay for resultant damage, such as damaged wooden floors, cupboards etc.
Some plumbers complete reports and refer the damage to a “burst pipe”. Pipes normally do not burst and insurance companies will appoint an assessor to examine the cause of the leak.
Unfortunately, there are not many solutions for the homeowner that incurs this problem:
- Either all the pipes have to be replaced which could amount to a substantial cost.
- We have been informed about a far cheaper alternative, where the existing pipes are injected and relined. The pipes also become resistant to water with a high PH level.
We have not tested the second option yet, but you can visit www.waterdamageservices.co.za to obtain more information.
Execuline, BnB Sure, MUA and Vantage Insurance increase premiums ››
The four insurers have already implemented increases and policyholders have been separately informed.
The main driver for the increase is the growing costs of imported vehicle spares, raising labour expenses. The general driver behaviour in South Africa is not a leading example and contributes negatively to our insurance premiums.
It is estimated, that vehicle accidents cost the South African economy between R 200 Bio. and R 300 Bio. every year. With no compulsory third party insurance in place and with approx. 50% of vehicles without insurance, the burden is loaded onto those that maintain an insurance policy.
SASRIA cover – does it include extensions? ››
South African Special Risks Insurance Association (SASRIA) is a government organisation that provides cover against damages that result from political riots.
With regards to cover for vehicles, please be informed that SASRIA only covers the material damage to your car, but not the extensions like care hire, towing charges or medical expenses.
The great geyser challenge ››
It is estimated that between 400’000 and 600’000 geyser are replaced by the insurance industry every year. This equals a replacement value of R 3,0 Bio. The resultant damages from burst geysers are estimated to amount to an additional R 4.0 Bio. annually.
Most geysers carry a five year warranty, but plumbers often do not inform the policyholder as they prefer just replacing a geyser. There is a label on your geyser (QR code) that gives the manufacturing date etc. but is often removed by contractors.
Should you install a new geyser, make sure the label is attached and you can have another stuck on your distribution board, so that you do not have to climb into the roof in the event of a claim. So next time your geyser breaks down, check first if it is still in the warranty period of the manufacturer.
Vehicles for R 8.5 Bio stolen every year in SA ››
This is the value of stolen and hijacked cars, of which 30% are estimated to end up in neighbouring countries, where syndicates are making huge profits.
Of these vehicles stolen, R 4.9 Bio. worth goes abroad, R 3.1 Bio. remain in SA and are cloned, whilst R 514 Mio. end up in “chop shops”. Cloning means that criminals transfer the VIN and engine numbers from legally owned vehicles to illegally obtained vehicles in an effort to legitimize the stolen vehicle.
Tech-enabled syndicates are also taking over the identity of vehicle owners. In some cases, they pay the excess at the panel beater for the repairs and collect the vehicle, which is never seen again by the real owner.
Micro-dotting and partnerships with tracking companies has helped the industry to combat the crime.
It is vital that consumers always purchase vehicles from reputable dealerships in order to avoid buying a cloned vehicle.
Cars stolen whilst being serviced at dealerships ››
High value vehicles are currently being targeted by syndicates. There modus operandi is as follows:
The suspects obtain information about the vehicle and the owner of the car that is booked in for a service.
It is probable that something is done deliberately wrong whilst servicing the vehicle, causing the owner to lodge a complaint after the service has been completed at the dealership. The client is then phoned by a false Customer Service Manager from the dealership who undertakes to rectify the error and organizes that the vehicle is collected from the customer.
We urge all our clients to verify whether they are dealing with the real persons claiming to be representatives of the service dealership.
Do you own an apartment in a body corporate? ››
The insurance for building damages is normally taken out by the body corporate.
Should the building be damaged, this policy will come into effect and pay for the loss you have suffered towards your apartment. But what happens if your property becomes inhabitable and alternative accommodation is necessary until you or your tenants can move in again?
Please note that most body corporate policies do not provide such cover. The only alternative is then to insure the contents, as this policy normally gives you the extension of “alternative rent”.
For more information, please contact our specialists in our short-term insurance department.
4. HEALTH CARE COVER
Discovery Health changes for 2015››
The largest open health insurer, with a market share of 53%, has announced the following changes:
- The average premium increase for next year is 10.9%
- The cash back partners, Pick n Pay, Woolworths, Clicks, Dis-Chem, Totalsports and Sportsmans Warehouse have been combined under the HealthyLiving benefit. To benefit from the cashback of up to 25% of your purchases, you need to activate the benefit online.
- Team Vitality has been introduced which gives members discounted fees when participating cycling and running events. Vitality points are also earned by taking part in such races.
- VitalityFit gives discounted membership fees when making use of fitness companies such as Adventure Boot Camp, CrossFit and Sweat1000.
- Discovery Homecare has been introduced. The service consists of nursing for therapeutic and post-natal reasons at the home of the member. This service is initially rolled out in the Gauteng area and will be spread over the rest of the country.
- MedSaver and ChroniCare have been combined into the single HealthyCare benefit, in order to give all members access to preventative care via Clicks and Dis-Chem.
- Members suffering from chronic conditions such as diabetes, hypertension, hyperlipidemia and ischemic heart disease can register online for the Personal Health Program. The member will have access to online lifestyle programs, monitoring, ongoing support and earns vitality points.
- A new application for smart phones has been introduced with Discovery Health on call. The member can make an appointment with a doctor via the app. The member is reminded shortly before and the doctor then calls the member for a virtual consultation. The invoice is then directly submitted to Discovery.
- The new PrimaryCare Plan has been launched from 1 January 2015. It is an employer based plan for staff members earning less than R 8000 p.m. The costs are funded by the employer and the contribution rate is R 199 plus VAT per member.
- From next year, the Vitality Baby program is introduced. Parents with new born babies can register online and will be assisted by Discovery during the first 1000 days of the child’s life. Members will receive gift packs, rewards and discounts.
- There are special offers for new members that join from 1 October 2014 to 31 March 2015. Free data, music and gym memberships are being offered.
For more information or plan changes, please contact Discovery Health on 0860 998877 or go to www.discoveryhealth.co.za
Please take out Gap Cover ››
Our office encounters more frequent local medical bills, which are not fully paid by the medical scheme. The reason for the widening gap is the rates that doctors and specialists charge against the reimbursement schedule of the insurance companies.
Recent examples are as follows:
- A patient had a cancerous cell removed from her face. The medical scheme only paid 1/3 of the total bill.
- Another patient had to undergo a hip replacement operation. From the total costs, 1/3 was for his own account.
We urge all locally insured clients to look at the possibility of a separate gap cover policy. Not only do they pay for the shortfall for hospitalization costs, but in some instances also provide cover for out-of-hospital expenses such as scans, gastrocopies etc.
New Bupa Global insurance premiums as from October 2014 ››
Please click here for the latest table of premiums.
5. LIFE INSURANCE
Discovery launches life policy in USD ››
The new product has been made available from 1 November 2014 and works as follows:
- The sum insured and the premiums are based in USD.
- The contract is concluded in SA but issued by the Discovery branch in Guernsey.
- In addition to death cover, a capital disability benefit can also be added.
- Premiums are converted into Rands every month and deducted from the SA bank account of the payer.
- The product makes use of the R 1.0 Mio single discretionary Forex allowance and no tax clearance from SARS is required.
- A pay back fund can be added to receive 500 times the initial monthly premium. The payback is available at age 65 or after a minimum of 20 years policy anniversary.
- A cash conversion benefit can be chosen at either 25% or 50% of the death benefit.
Department of Home Affairs still in disarray ››
The introduction of the new Regulations this year in May has not been a smooth process and we are still facing numerous challenges:
- The online application system via VFS is not consistent and does not work at times. Many applicants are seeking assistance from immigration practitioners as the online application is not easy to navigate through.
- Although the new system should enable applicants to receive their visa in time, we have had clients not receiving their visitor’s visa extension after 6 months!
- The SA Embassies abroad have not been trained yet and are still working under the old regulations which makes matters even more confusing.
- Too many applications are being incorrectly dealt with and many more declined as in the past. The appeal process is then instituted and valuable time is wasted if the application was not dealt with correctly in the first place.
We will keep you updated on further developments.
Birth certificates for travelling children postponed to June 2015 ››
The new Minister of Home Affairs, Mr. Malusi Gigaba announced on the 16th September 2014, that the requirement for minor children having to travel with additional documents, has been postponed to 1 June 2015.
The Department was heavily criticised on these requirements and has bowed to the pressure.
Do not leave SA without a valid permit ››
We have seen some major delays at the Department with the issuing of temporary residence extensions in time.
If you have an extension pending and leave SA before it is issued, you can be declared “undesirable” at the airport and will be faced with a ban from re-entering South Africa from 12 months to 5 years. This applies in all instances, even if the Department is at fault.
Should you leave without a valid permit, we will have to lodge an appeal and argue the matter on your behalf. Unfortunately, these appeals are currently taking such a long time and you cannot return until such appeal has been successful.
We urge all clients to look at applying for long-term permits if possible.
Number of BRICS’ tourists visiting SA down ››
The new visa regulations are already having devastating implications for tourist arrivals in South Africa. Tourist arrivals from fellow BRICS countries in particular have been hit extremely hard. Reports suggest that new tourist arrivals from China and India are down by 80 – 90% since 1 October.
A number of South African tour operators have indicated, on the record, that they have experienced significant reductions in tourist arrivals.
It is becoming clear that the new regulations are discouraging tourists from coming to South Africa. In China, there are only 3 locations to get a South African visa. In India, there are only 2 locations to find a visa. These are huge countries, where it will be impossible for millions of people to get South African visas in person.
The decrease in tourist arrivals will inevitably have enormous consequences for the tourism sector in South Africa. There is a real risk that we could lose jobs if these regulations are not changed.
Which country has got the lowest travelling costs? ››
GoEuro, an online platform for travellers, has recently published a worldwide comparison of travel costs in 51 different countries. The comparison looked at bus, train and flight fares for an average travel distance of 100 kilometres.
South Africa is in first place, with an average cost of Euro 8.77 for air, Euro 2.83 for bus and Euro 1.45 for train travel for 100 kilometres.
The most expensive country is Switzerland with Euro 18.49 for air, Euro 14.41 for bus and Euro 29.55 for train travel.
You can find the full report on www.goeuro.de/transportpreis-index.
Western Cape are SA’s best drivers ››
According to Discovery’s Insure recent survey from their telemetric data base, the Western Cape has the best drivers, followed by Gauteng, the Eastern Cape, North West, Free State, Northern Cape, Kwazulu-Natal, Mpumalanga and Limpopo. The drivers from Limpopo were found to use their cellphones the most whilst driving.
The data used included speeding, harsh breaking and cornering as well as distracted driving (cellphones).
According to the results, men lost points with speeding and cornering, whilst women lost points with harsh breaking and talking on the cellphone whilst driving.
Unicef: Over one third of SA’s population under 18 by next year ››
According to a recent report by the organisation, 18 Million people out of 53 Million people in South Africa will be minors in 2015.
The South African population equals 5% of all inhabitants of the African continent. Nigeria has got the highest population on the continent with 16%, and is estimated to grow from 184 Million to 440 Millions Nigerians by 2050.
Regarding fertility rates, South Africa stands at 2.3 children per women, one of the lowest on the continent and below the African average of 3. This is due to SA being amongst the top 5 countries using contraceptions.
Old age people in South Africa are expected to be 9 out of 100 people.
Life expectancy the highest in the Western Cape ››
According to a report of Statistics SA, the Western Cape has the highest numbers out of all 9 provinces, with men reaching an average of 63.9 years and ladies ageing on average 67.9 years. The national average stands at 61 years, up by 9% compared to 2005.
The report attributes the increase in life expectancy due to lower infant mortality rates and a decrease in HIV/Aids related deaths.
The Western Cape is still receiving the highest number of immigrants from abroad and other provinces. And with our local rugby team winning the Curry Cup, all seems to be going well in the Western Cape!
Crime statistics South Africa ››
The latest statistics from March 2013 to March 2014 were published in September and show the following details for the Western Cape:
- Aggravated robbery increased by 16.7% to 19526 cases. Bank robberies doubled over the last year.
- Car theft is up by 3.3% to 9511 vehicles stolen last year.
- Drug related crime is standing at 85463 cases, up 4.1% from last year.
- It was encouraging to see that sex offences are down 8.1% to 8062 incidents, the lowest level in the last decade.
- The traffic police seems to be doing their job, reducing drunk driving cases by 10.4% to 13588 offences.
- Home robberies are on the increase by 2%, having 50589 cases reported.
Unfortunately, we have the highest per capita rate of housebreaking and drug related crimes in the world. Most of these crimes originate from drug, alcohol abuse and gang activities. Nyanga in the Western Cape is currently one of the crime capitals in South Africa.
Six police stations in the Western Cape (Nyanga, Gugulethu, Khayelithsa, Philippi East, Lingulethu West and Harare) account for more than 40% of serious crimes in the Western Cape.
8. SWISSFIN MATTERS
SwissFin at German School Bazar ››
The memories of the Bazaar on 01 November 2014 will linger for quite a while longer. We have never before heard so much praise about the amazing atmosphere, the overall variety of goods and activities on offer, the excellent band and of course the superb weather!
And this special occasion is always an opportunity to show all visitors what is SwissFin all about. With a little stand we presented a competition with the following great prizes:
1. Prize: Spa Treatment for 2, worth R 2,500.00 from Mukda Thai Spa in Gordons Bay
2. Prize: Dinner for 2, worth R 800.00 from Charcoal Restaurant in Cape Town
3. Prize: Muscato Grappa and Cape Fynbos, worth R 380.00 from Wilderer Distillery in Paarl
Congratulations to the winners!
One Christmas box for one Child ››
As part of the Nelson Mandela legacy “67 minutes” we created and filled 7 shoe boxes called Xmas box (each employee one box) to the children which are infected with TB and are treated at the Brooklyn Chest TB Hospital in Ysterplaat.
Brooklyn Chest is a government funded tuberculosis (TB) hospital in Cape Town. It is actually the only TB hospital in Western Cape.
The hospital accepts patients based on referrals by other clinics, hospitals, and do not require the patients to pay any fees. The hospital is divided into different wards according to gender and age. There are also two separate wards for the multidrug- resistant (MDR) and extreme drug-resistant (XDR) TB patients. These patients are isolated from the rest of the hospital because the strain of TB they are carrying is extremely dangerous.
All the kids in the ward are infected with TB – an infection, primarily in the lungs, caused by a bacterial called Mycobacterium Tuberculosis. Most of the children in the ward have been on treatment and therefore not infectious.
We are looking forward to bring all those colourful boxes to the kids in need and of course we will let you know on our next Newsletter about all the happy faces.
Our office hours over the festive season ››
Please note that we are open on normal work days from 08.30 to 16.30. Our offices will be closed from the 24th December 2014 until the 4th January 2015.
Should you have an emergency during the above period, please contact the following short-term insurer’s emergency numbers:
0861 000 628
Mutual & Federal
0860 24 7 365
0860 005 666
Hollard Roadside Assist
Hollard Geyser Hotline
021 702 0442 (Fogi Plumbing)
082 775 3884
Advertising opportunity in our newsletter ››
We are offering you the possibility to advertise in our newsletter. If you have a business or service you would like to advertise, please feel free to contact us.
Our newsletter is sent to over 3500 recipients with a much higher readership.
The cost is R 2000 plus VAT per advert.