Alexander Forbes Financial Services, the legion of fund administration in the country, is to tap on the virgin deferred┬ágray-hair┬áfund┬ámarket as it continues the search to grow investors’┬ávalue in the less exploited financial planning areas.
The national deferred market is currently valued at close to 10 percent or┬áabove┬áP4 billion┬áof the total value of the pension funds industry.
Traditionally, deferred members (people┬áwho left their retirement fund earlier┬áthan retirement period or still┬áphysically active) are not allowed to contribute to┬áa retirement savings.
The┬áscheme,┬ádubbed┬áAlexander Forbes Individual┬áMember Retirement┬áFund, is┬áfurther targeted at individual contributors┬áaiming to increase their retirement packages without the┬áassistance of their┬áemployers and the deferred contributors who are┬áplanning to have a more comfortable retirement life.
The┬áscheme is composed of a suit of┬áoffers that are┬átailor-made for the client depending on age and risk appetite, however, the┬áhesitant ones are to be guided through.
The move is expected to put it head to head with the leading insurance companies that have been offering┬áindividual retirement scheme to local clients.
“This will be the first kind of scheme in the local market. What has been happening is that┬ápeople have been┬ábundled together irrespective of their┬áage and risk appetite,” the company that has been policing┬áfund management companies said┬áFriday.
It said the┬ámoney that it will get from┬ácontributors will be farmed out to the┬álocal fund management companies to invest it both locally┬áand internationally. It┬áis not planning to bend the┬áinvestment┬áframe-work of┬á30 percent locally and 70 percent off-shore.
But the most interesting feature will be the categorisation of its members┬áinto three components of┬áaggressive, moderate and┬áconservativeÔÇödepending on┬á how soon one is likely to┬á have a gray-hair or risk appetite.
On annual basis, the subscriber would be asked to opt for the investment portfolios they would like to fall within, but, if undecided, the fund will take a default move.
The┬áscheme is restricted to the traditional asset classes, namely; stocks, bonds and pure cash.
The new scheme will add on a number of┬áinvestment products that are tax deductable in the local market. According to the provident and pension fund, members┬ácan save up to 15 percent of their annual gross salary┬áby┬ásubscribing to a long term saving plan.
“The AFIMRF is a retail┬áretirement┬áfund┬ádesigned┬áspecifically for individuals, rather than corporate. The AFIMRF has been approved by the Non Banking┬áFinancial Institutions Regulatory Authority and Botswana Unified Revenue Services and is probably the most advanced fund of its type in Botswana. The AFIMRF has been developed for individuals who would like to proactively plan for their retirement through a product which offers flexibility and individual choice,” the company said in its statement released on Friday.
The┬áfund will come┬áat┬áa pricy┬álevel of┬á25 basis pointÔÇöabove the current market rates┬áof┬áone percent of┬áthe individuals fund credit. But that comes with a lot of┬ápackages such as┬áadvice of financial planners and the monthly update and the individual connection to the on-line information on the performance of the fund.