small, medium & micro enterprises

1. small, medium & micro enterprises 25 October 2007

2. small, medium & micro enterprises Agenda • Lets talk about 2010! • Do SME’s have unique needs? • What are the benefits for employers to provide employee benefits? fundsatwork

3. small, medium & micro enterprises Agenda • Lets talk about 2010! • Do SME’s have unique needs? • What are the benefits for employers to provide employee benefits? fundsatwork

4. Lets talk about 2010! • Trevor Manual said: “Plan and prepare for the long term.” • “…too many people … cash in their benefits when they change jobs.” • The number of people savings in SA has reduced from 9% to 4% in the last 10 years

5. Lets talk about 2010! poverty / social security comfort / prosperity

6. Lets talk about 2010! Retirement fund reform: broad principles The existing retirement savings industry serves a limited section of the population. Social security systems are effective worldwide at redistributing wealth • move from voluntary to compulsory • enforced savings and preservation • amalgamation of state benefits

7. Lets talk about 2010! Private pension provision Above Threshold 3 (no tax encouragement) Above Threshold 2 (limited tax encouragement) Voluntary occupational pension fund or private pension fund Threshold 2 (tax encouragement) earnings ≤ ? Compulsory occupational pension National Social Security Scheme Threshold 1 (tax encouragement) earnings ≤ ? • Unemployment • Retirement • Death & disability Social assistance grant Retain social assistance grant (old age pension) but increase or remove the means test threshold

8. Lets talk about 2010! poverty / social security comfort / prosperity

9. Employers are going to have to contribute to the fund for their employees Employees are going to also have to contribute, possibly reducing their take-home pay Consumers are going to have to become more educated and more interactive with their retirement, death and disability benefits Lets talk about 2010! How does this impact on you and your employees?

10. small, medium & micro enterprises Agenda • Lets talk about 2010! • Do SME’s have unique needs? • What are the benefits for employers to provide employee benefits? fundsatwork

11. Do SME’s have unique needs? • Entrepreneurial culture • Creating a sustainable business is their main focus • Expertise in a specific area of their business, therefore do need to be bound down with all the legislation and pension fund issues • Key staff often pose a high risk to the business if they leave • They do not have the same bargaining power as a large corporate • Often resources are already stretched to just cope with basic day to day HR admin fundsatwork

12. Do SME’s have unique needs? Are there products for SME’s? • They are called Umbrella funds • Multiple employers enjoy the benefits as if they were a large corporate • Pricing becomes competitive fundsatwork

13. small, medium & micro enterprises Agenda • Lets talk about 2010! • Do SME’s have unique needs? • What are the benefits for employers to provide employee benefits? fundsatwork

14. Benefits for providing employee benefits Advantages for you as an employer • Allows for the stability and contentment of the employees, which results in lower staff turnover and the reduction of recruitment and training costs • Helps to attract better calibre of staff • Social responsibility • Employer contributions are tax deductible

15. Benefits for providing employee benefits Advantages for your employees • Provides security and provides a base for all their retirement, life & disability plans • Ensures that employees are adequately covered and can provide for themselves and their dependants in the event of death, disability and retirement. • Employee contributions to a pension fund are tax deductible. • Life and disability cover while employed may be obtained at a lower cost than individual cover.

16. small, medium & micro enterprises Get off the starting blocks! • Competent financial advisers are there to guide you through the process • Start now so that your employees can get used to saving over a period of time

17. Questions? Thank you