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Category:
Insurance
News /
Investments /
April 2007
Old Mutual declares above inflation
bonuses for pensioners
Made possible partly by the exceptional
strong growth in the equity markets
One of the biggest financial concerns
for anyone who has reached retirement age is whether the increases
in the amounts that they receive from their retirement fund or
annuity will keep up with inflation each year.
 Not
so for the 135 000 South Africans who receive a pension via Old
Mutual Corporate’s annuity policies. The company announced this week
that these pensioners will again be given pension increases that are
comfortably above current inflation figures.
The 2007 bonus rates (increases)
announced by Old Mutual for its with-profit annuity Platinum Pension
Portfolio vary from 11% for the top pricing category to 6.5% for the
lowest pricing category.
For the Platinum Pension 2003 annuity
portfolio, the bonus rates vary from 9% to 6.5%. These increases
apply to the corporate pension schemes, which are underwritten by
Old Mutual.
Roy Stephenson, Annuities Actuary at
Old Mutual Corporate, says pensioner increases for all four
categories of the Platinum Pension 2003 series have exceeded CPIX
over the four years since the product was introduced. “The increases
compare favourably to inflation. CPI & CPIX for the 12 months to
December 2006 were 5.8% and 5.0% respectively.”
The consumer price index (CPI) measures
the cost of a basket of goods and services over time, including the
cost of mortgage loans while the CPIX measures inflation without the
effects of mortgage loans. These measures are no doubt one of the
most important indicators of the rate at which the value of one’s
money is eroded.
Stephenson warns that the current
climate of rising oil prices, combined with the current drought in
some parts of the country is putting the pressure on inflation.
“Pensioners should therefore be circumspect in how they spend their
money.”
He points out that the increases will
become effective from this month onwards, depending on the increase
month chosen by the particular participating fund. “The earliest
effective date is April and the latest is March next year.”
Stephenson points out that the rates of
increases have largely been maintained at last year’s levels and
again are significantly higher than the long-term expected average
bonus rates due to the very strong returns earned on investments
during the year.
He says the above inflation increases
have been made possible partly by the exceptional strong growth in
the equity markets of the past couple of years, but that there is no
guarantee that equity markets will continue to deliver similar
growth in future.
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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