Welcome to Matters of Mind (MM)
August 2024 Second Edition
“No one ever made a decision because of a number. They need a story.”
— Daniel Kahneman, Nobel Prize-winning psychologist (2002)
Prize motivation: “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty”
It is clear from Kahneman’s multiple experiments that human beings need a story. This is where leadership can make a difference. Read the farewell speech by Melinda French Gates to the Gates Foundation in the About YOU section. One word can conjure up a story.
In this edition, we expose the implications of census data, give emphasis to the power of diversity and inclusion and explore how the two-pot system will impact members of retirement funds and the economy at large. The NHI is still in focus as is the ever-growing threat of climate change and what this means for insurers. All of these are stories…
Enjoy the read!
MM Editorial Team
Economic matters
How inaccurate Census 2022 data from Stats SA is affecting towns & cities
In July this year, Stats SA dismissed the Centre for Actuarial Research’s claim that Census 2022 figures should be treated as estimates due to undercounting issues.
The impact is alarming as is shown in this radio interview. 5.22 min
GDP for second quarter: economists expect uptick after contraction
The 0.1% quarterly GDP contraction in the first quarter partially reversed the 0.3% expansion observed in the fourth quarter of 2023.
Handy high-level overview. 2min read
Economic wrap-up for August 2024
The latest set of economic indicators paint a preliminary picture of economic performance in the second quarter (April–June).
This article is directly from Stats SA. 2.5min read with access to data sources.
Financial Services Industry
VBS-linked adviser still a key individual of FSP
FSCA failed to issue a warning on several wealth firms associated with VBS.
According to media reports, there were at least three wealth firms linked to the controversial VBS Mutual Bank, including Gundo Wealth, Moshate Investments and TNE Advisory Services.
3min read
Diversity and Inclusion
Meet Siphesihle Ngcingwana – one of the leading ladies in SA’s reinsurance industry
In this time and age, many women juggle workplace and homelife responsibilities. This “ability to wear many hats,” is one of the benefits that a uniquely female perspective brings to her role, according to Siphesihle Ngcingwana, Head of Reinsurance Buying at Santam Re & International
Joyful 3.5min read
Unconscious biases in hiring and promotion still exists
An interview with Fazila Manjoo, Portfolio Manager, Mergence Investment Managers. 3min read
The Equilibrium effect: Women at the helm of industry
The financial services industry, often perceived as traditional, is transforming. At Equilibrium, this change is being driven by remarkable women in our leadership team who are shaping a more innovative and inclusive future.
3min read
The changing face of the insurance industry
While much of the progress can be attributed to an increased focus on female representation, prompting a change in workplace policies that directly address the imbalances that were so prevalent in the past, the new work opportunities offered by the evolving insurance landscape is also contributing to making the industry attractive to more women.
3min read
General Insurance
Peril Paralysis – Building Industry under the magnifying glass
In George, thirty-four people died when a partially completed five storey residential building collapsed. This event is tragic, and albeit the worst building disaster in South Africa, is by no means an isolated incident of professional incompetence. Whenever disasters of this magnitude unfold, questions are rightly asked around why disasters of this magnitude persist in today’s age of technological advancement and education. Are we doomed to repeat history or are we able to distil lessons and learn from them?
This article draws a direct line between events like these and the sustainability of insuring professionals in the built industry. 5min read
Health Insurance
Liberty Health reaches the end of the road – Moneyweb
This article requires a subscription to be read and is dated 13 August, but you may find the one below informative enough for the moment.
Liberty plans exit from health business
Insurer Liberty Holdings, which is wholly owned by the Standard Bank Group, may restructure parts of its operations, including its health business, as turnaround efforts have been “largely unsuccessful”, it says. 2.5min read
Words on wealth: NHI is the test for South Africa’s future
National Health Insurance, or the NHI, is the single biggest indicator of whether the Government of National Unity (GNU) will work, whether the public and private sectors can genuinely co-operate in the best interests of the country and, ultimately, whether South Africa can move forward economically while reversing the ever-widening inequality gap.
An opinion piece from former editor of Personal Finance IOL. 4min read
Medical aids are out under the NHI — even if it means the end of the GNU
Section 33 of the National Health Insurance (NHI) Act — the part that says medical aids in their current form will be scrapped, as they won’t be allowed to cover the same services as the NHI — is staying as is, even if it costs South Africa its government of national unity (GNU), Health Minister Aaron Motsoaledi told Bhekisisa.
Comprehensive 5min read
Moultrie and Dorrington | Rerunning census is pointless, but SA still needs alternative estimates
A must read because it affects forecasts in all practice areas and is particularly important in budgeting for government services like the NHI. 6min read
Investments
Markets may be turbulent, but stabilisation is ahead: Mike Dolan
What looks like a financial market in disarray may instead just be normalization that will ultimately help insulate investment portfolios rather than sending them to the ground.
3min read
Two-pot retirement system: impact on investors, markets and SA economy
Government will get more money through taxing your payout, while you will have more money to spend. Could the selling of some investments to realise the cash payouts disrupt the local financial markets?
4min read
Executive Viewpoint: Reason Over Rhetoric
Some environmental activists have turned to demanding insurers immediately stop underwriting and investing in fossil fuel projects, believing this will help solve climate change.
This article speaks about insurers helping to bridge the gap during the transition top renewable energy. 2.5min read
Retirement / Pensions
SA’s largest umbrella retirement fund expects two-pots to drive membership growth
The R157bn Old Mutual SuperFund also sees further consolidation of standalone retirement funds in the future.
3min read
FSCA publishes ‘two pots’ guidance for defined-benefit funds
The FSCA has published a “best practice” guidance on how retirement funds should apply the two-pot retirement system to defined-benefit (DB) members, or to defined-contribution (DC) members who have a DB underpin at retirement.
3min read
Navigating the defined benefit landscape from 1 September 2024
1 September 2024 marks the commencement of the Two Component system.
Good support for the work stakeholders have done to ready themselves for this day and good distinctions drawn between the defined benefit schemes and defined contribution schemes.
6min read or listen to the article.
Adjudicator urges funds and members to communicate to avoid two-pot complaints
Members of retirement funds who are contemplating making a withdrawal when the two-pot retirement system takes effect next month should find out whether they will be entitled to access a portion of their savings, advises the Office of the Pension Funds Adjudicator (OPFA).
4min read
What the two-pot system means for South Africa
To better understand the potential implications, research conducted by Investec draws on early pension withdrawal regulatory amendments implemented in Australia, Chile and Peru, offering instructive insights and potential lessons related to the macroeconomic implications of pension fund withdrawals on capital markets.
3min read
Why was this pension fund principal officer paid seven times the industry average?
Former MEPF PO Margaret le Grange’s pay saw a compounded annual growth rate of 17.04% in her salary, despite assets growing at a rate of just 7.44%.
3min read
About YOU
“So many advantages come from being willing to look like an idiot in the short term.
You stay silent in an important meeting, afraid to voice your critical thoughts and watch the project fail. You don’t write the novel because people might not read it. You don’t admit you were wrong and repeatedly make the same mistake. You don’t go to the gym because it means you would have to admit to not knowing what to do. You don’t ask the person out because you’re scared of rejection. You don’t start the business because you might fail. You don’t say sorry because you’re waiting for the other person to go first …
A few seconds of discomfort changes everything.”
The above comes from Farnam Street Blog 18 August. It is a an insightful read of at least 10 minutes which you can access here.
Melinda French Gates’s 1-Word Response to Her Divorce and Departure From the Gates Foundation Is a Lesson for Every Leader
In a letter to her former colleagues, French Gates expresses her gratitude.
The foundation the pair started 25 years ago was not only one of the largest private charity groups but also one of the most influential–giving away more than $78 billion since its inception. That French Gates was walking away was, and is, a big deal.
Here is a story which is evocative. Gratitude is arguably a vital leadership skill and evokes positive feelings in those appreciated. Don’t wait to start practising it! 2.5min read