PPS, Yes or No?

[Maverick154]

Hey Guys.

So a quick question that I hope someone out there has experience with. I would like to know, just because I can qualify for insurance and investing through PPS, does this mean I should?

How do they for example compare to other companies with regards to Life Insurance, for example, should one go for PPS or discovery?

Second question, how do they compare with regards to investing, specifically in the area of retirement annuities?

I know that ideally I would need to compare rates etc, but that will take time and I was hoping someone here had some quick advice I could draw from .

Thanks

 

[upup]

And who will PPS be?

 

[Maverick154]

And who will PPS be?

https://www.pps.co.za/pages/home/home.php

 

[Verde]

For life/disability insurance PPS is the best by far.

For investments, no. See RA thread recently started by yourself for investment advice.

 

[Cius]

Definitely worth it. I have a few products with PPS. The products to aim for are those that qualify for the profit share benefit and the list of products has expanded this year I hear. No other company can touch PPS because of that. I quoted widely for life cover and income protection and in both cases PPS had a very competitive price. On top of that unlike any other insurance company they are essentially a trust owned by the members who contribute and all profits come back to the members. For the qualifying products I tend to get between 60 and 80% of my premiums back each year in the form of profit share into my profit share account which acts like an RA that you get when you are 55. Seriously, no matter what Liberty or Sanlam or Old mutual try to tell you they cannot match that profit share account or even come close. PPS is one of the best reasons to get that honours year done if you have a bachelors purely because of how much it saves you in the long run.

The ancillary stuff like the medical aid and short term insurance is a separate discussion but their core products are amazing.

For those that don't know to get into PPS you need a 4 year degree or equivalent.

 

[Ejeckt]

Definitely worth it. I have a few products with PPS. The products to aim for are those that qualify for the profit share benefit and the list of products has expanded this year I hear. No other company can touch PPS because of that. I quoted widely for life cover and income protection and in both cases PPS had a very competitive price. On top of that unlike any other insurance company they are essentially a trust owned by the members who contribute and all profits come back to the members. For the qualifying products I tend to get between 60 and 80% of my premiums back each year in the form of profit share into my profit share account which acts like an RA that you get when you are 55. Seriously, no matter what Liberty or Sanlam or Old mutual try to tell you they cannot match that profit share account or even come close. PPS is one of the best reasons to get that honours year done if you have a bachelors purely because of how much it saves you in the long run.

The ancillary stuff like the medical aid and short term insurance is a separate discussion but their core products are amazing.

For those that don't know to get into PPS you need a 4 year degree or equivalent.

This.

I also have medical aid with them: profmed. They're decent, but since it's also member owned the profit share from the medical aid section of their business also feeds into your investment.

 

[Cius]

My PPS broker actually called me on Friday saying we need to adjust some stuff. My current PPS RA has been going for a few years but there are new RA's that actually allow for Profit share so he wants me to switch into one of those rather. I am also with PPS Short term insurance as of 2 years ago and their call center won the best in SA in a recent survey. I can believe it. I have had to put in 3 claims in 6 months and each time I was blown away at how professionally I was handled by them. To actually have someone call back when they said they would was a revelation.

 

[R13...]

PPS's RA has moved to Sanlam I wonder what this profit share your broker is referring to is.

 

[Cius]

PPS's RA has moved to Sanlam I wonder what this profit share your broker is referring to is.

Perhaps I misunderstood. All I recall from the phone call with him was that we could move stuff to be more efficient and that the older PPS RA's where no longer the best option and hence he wanted me to switch. Sounded like I could switch into any of the good Unit Trust's provided it met the section 28 requirements in terms of funding split.

 

[WireFree]

I know that ideally I would need to compare rates etc, but that will take time and I was hoping someone here had some quick advice I could draw from .

Rates and benefits aside. I've found customer service with PPS to be atrocious.

Here are some examples.
1) I took out vehicle insurance with them in 2009. I had a double tyre in the N3 in the middle of nowhere at 8pm on a Friday. As the short-term is through Hollard, I called Hollard and their response was your own your own were not interested in assisting you and your passenger. We are only going to send a tow trunk for the car. Eventually my car got towed and I sorted by own transport with Avis. The service the following week was just a bad. I made a formal complaint which went to Thinus Ferreira the following week, which went no-where. Three weeks later I sent an email to the PPS CEO and then only did I receive attention and proper customer service.
2) Last year when PPS stopped Bonus Allocations to the Sanlam based RA policies and there was a high penalty to switch out I decided to address this with PPS as I should not have been charged penalties, because they stopped the bonus allocations that were sold to policy holders during policy inception. I received no feedback. I eventually email the CEO and the email eventually got attention. However, Thinus Ferreira, is now the principle officer of the RA/Investments department and his PA sends emails on his behalf. They tried their best to dodge the crucial questions. Anyway, I eventually found out that the bonus allocation for the unit trust based RA was ~R100 per R100,000 invested as at the end of 2012 (that's 0.1% of the amount invested). This was not a compelling reason to have a PPS RA and I am now switching to another Sanlam based RA to avoid the high penalties of switching out.
3) I recently had a broker from another Life Insurance company convince me to cancel with PPS and switch completely to the new company. A week ago I received "automated emails" from the retentions and replacements departments also informing me that a Retentions Consultant will be in contact with me shortly. The email also provided the email addresses I should contact them on if I have any queries. It is now a week later and no-one has contacted me. I sent emails on Monday to the retentions and replacements email addresses. This morning I received a "Not Read" email confirmation for the emails sent to retentions and replacements.

You can also check out Hello Peter and the number of complaints related to Customer Service.

Anyway, Maverick154 you should also consider Customer Service as an important criteria when selecting these policies. Irrespective of the rates, when the time comes and you need a payout "Are they going to mess you around?"

 

[Verde]

PPS's RA has moved to Sanlam I wonder what this profit share your broker is referring to is.

PPS used to offer an old style RA underwritten by Sanlam - up to 2010 I think.
They started a new venture (2007) in a 50/50 partnership with Coronation to offer unit trust RA's on a lisp platform under the PPS brand. Last year they bought out Coronation's 50% stake so it is now 100% PPS.
PPS brokers have been encouraging holders of the old RA's to convert to the new platform, and they stopped selling the old style PPS RA's years ago.

What I don't like about the PPS unit trust RA:
1. They charge an annual admin fee on a sliding scale starting at .8% pa.
2. They push multi managed funds which involves another layer of management fees. (They do offer a good selection of single manager funds on their platform though.)
3. Their customer service is poor - From personal experience compared to Allan Gray.
4. They do stupid things eg. they offer an SA equity index fund on their platform (great), but it has a TER of 1.15%, higher than many actively managed funds.
5. The MD, Mike Jackson is ex old mutual and true to pedigree he has consistently favoured style over substance.

So it is better to use a manager like Allan Gray offering great service and charging no admin fees.

However from this year PPS RA investors will share in profit which could be a game changer. I am eagerly awaiting the 2013 financials (out towards end april) to see how this pans out.

 

[Maverick154]

Thanks for the replies, you guys mention some really important things I never thought of. I was wondering if you guys could give me your opinion on the following. I took out a PPS RA almost 3 years ago and then the whole shift happenend and my broker then said I need to now take out a Sanlam RA, back then I was naive and did not really know too much about this sort of thing, so I took the new Sanlam RA and hoped for the best. This new RA is now with Sanlam and no longer with PPS, although I have another RA that is still with PPS because I was told the same thing, I get penalised if I move the fund (so I just left it there).

So the Sanlam RA I have been told charges about 2.5% in fees but they invest in the Allan Gray Balanced Fund, Coronation Balanced Fund, Investec Managed Fund and the SIM Balanced Fund. So my contributions are split 4 ways each month and the funds have really performed rather well over the last while. But here is my concern and I was wondering if someone here could perhaps shed some light on this.

My fund value is currently sitting at R5676, and from what I have worked out my total contributions are R5500 over 11 months. Sanlam has advised me that they have a new product coming out that is called Cumulus Echo which can be found here:

http://www.sanlam.co.za/wps/wcm/con...rement/sanlam+cumulus+echo+retirement+annuity

This fund works by paying out a bonus for the amount of years that you contribute in total, you can stop payments if you want to. But the fees are now 2.8%.

So basically I want to know if you guys think I should move to doing this on my own through Coronation, I will then just invest in their Balanced Fund through an RA (so that I still get the tax benefit)? Or should I stay the course and go with this new product that they are recommending? My concerns with doing it on my own through Coronation is what if something happens to their fund and I lose a lot of money, where I am at now I have diversification.

Many thanks to whoever helps

 

[WireFree]

I am moving my PPS Policy based RA completely to Sanlam. The fee for this move is under R1000 as opposed to switching out completely - then the penalty is 25-30% of the current value. The switch will probably be into the Cumulus Echo - and yes the fees are high.

Anyway, my other RA is with Discovery. There are a couple hundred funds you can select with Discovery - however your portfolio must be Regulation 28 compliant. See https://www.discovery.co.za/portal/individual/invest-choose-funds-discovery-invest for the funds you can select. If you select Discovery's own funds the fees are lower.

For the past few years I've been doing lump sum RAs with Discovery around Jan/Feb so that I do not have to commit to a monthly payment. I've recently learned that if the broker cuts his commission by 50% there are no penalties if you decide to stop making monthly contributions after 4 months. I can also view the portfolio performance on the Discovery website. If the Portfolio or individual funds are not performing well you can make 4 free fund switches per annum either by yourself on the Discovery website, or via a broker. I am also considering PSG - if the flexibility is there.

 

[Maverick154]

I am moving my PPS Policy based RA completely to Sanlam. The fee for this move is under R1000 as opposed to switching out completely - then the penalty is 25-30% of the current value. The switch will probably be into the Cumulus Echo - and yes the fees are high.

Anyway, my other RA is with Discovery. There are a couple hundred funds you can select with Discovery - however your portfolio must be Regulation 28 compliant. See https://www.discovery.co.za/portal/individual/invest-choose-funds-discovery-invest for the funds you can select. If you select Discovery's own funds the fees are lower.

For the past few years I've been doing lump sum RAs with Discovery around Jan/Feb so that I do not have to commit to a monthly payment. I've recently learned that if the broker cuts his commission by 50% there are no penalties if you decide to stop making monthly contributions after 4 months. I can also view the portfolio performance on the Discovery website. If the Portfolio or individual funds are not performing well you can make 4 free fund switches per annum either by yourself on the Discovery website, or via a broker. I am also considering PSG - if the flexibility is there.

But do you think the Cumulus Echo will be worth it considering the fees are 2.8% vs 1.64% when investing in the Coronation Balanced Fund directly? I am trying to figure out what would be best over the next 30+ years. I know that 2.8% also includes my brokers fees and although I do not like paying it, it is nice to have a broker that gives good advise. So just wondering if all in all with this new product, will I not end up at the same destination whether I go this route or with a direct investment?

 

[WireFree]

But do you think the Cumulus Echo will be worth it considering the fees are 2.8% vs 1.64% when investing in the Coronation Balanced Fund directly?

No - Definitely NOT! The old PPS policy based RA expects you to pay every month until you retire. If you want to stop there are high penalties. Rather than stay with the current PPS policy that has not been performing well over the last few years and is unlikely to perform well in the future as PPS has shifted it's interest and Sanlam (who manages it) wants people to take up it's other products. The best option for this monthly payment is to switch to a Sanlam RA that will obviously provide better returns since I am stuck with it - unless I incur the exit penalties.

Going direct is better, but I would recommend a platform that allows you to select different funds from different fund managers. Even if the fund manager for a particular fund has been doing a great job over the past few years, they move on and fund managers change and the fund may not perform great in say 10 years time. You want some flexibility to switch to another fund/s in the future.

I know that 2.8% also includes my brokers fees and although I do not like paying it, it is nice to have a broker that gives good advise.

If you go the broker route, then ask the broker the following:
1) What does the broker invest in?
2) Does the broker sell products from more than one insurance company? If yes what are the pros and cons of each company and what is his commission in each case? He/She will generally push the one with the best commission.
3) Can you stop the monthly payments in a few years time if your personal circumstances change? If you are going to be hit with high penalties for being unable to pay - then stay away unless you are willing to take the knock.

 

[Maverick154]

No - Definitely NOT!

Not even with the fact that you get a bonus amount paid out to you if you invest over a period? The bonus looks to be rather decent.

If you go the broker route, then ask the broker the following:
1) What does the broker invest in?
2) Does the broker sell products from more than one insurance company? If yes what are the pros and cons of each company and what is his commission in each case? He/She will generally push the one with the best commission.
3) Can you stop the monthly payments in a few years time if your personal circumstances change? If you are going to be hit with high penalties for being unable to pay - then stay away unless you are willing to take the knock.

1) He invests in the same stuff that I am invested in
2) He sells both PPS and Sanlam products, he actually changed me from the one based on performance
3) I can stop them on this new product at any time without fees as far as I can remember

On a final note, he said I can move both my PPS RA and the current Sanlam one to the new Cumulus product at no charge and with no penalties.

 

[Verde]

Thanks for the replies, you guys mention some really important things I never thought of. I was wondering if you guys could give me your opinion on the following. I took out a PPS RA almost 3 years ago and then the whole shift happenend and my broker then said I need to now take out a Sanlam RA, back then I was naive and did not really know too much about this sort of thing, so I took the new Sanlam RA and hoped for the best. This new RA is now with Sanlam and no longer with PPS, although I have another RA that is still with PPS because I was told the same thing, I get penalised if I move the fund (so I just left it there).

So the Sanlam RA I have been told charges about 2.5% in fees but they invest in the Allan Gray Balanced Fund, Coronation Balanced Fund, Investec Managed Fund and the SIM Balanced Fund. So my contributions are split 4 ways each month and the funds have really performed rather well over the last while. But here is my concern and I was wondering if someone here could perhaps shed some light on this.

My fund value is currently sitting at R5676, and from what I have worked out my total contributions are R5500 over 11 months. Sanlam has advised me that they have a new product coming out that is called Cumulus Echo which can be found here:

http://www.sanlam.co.za/wps/wcm/con...rement/sanlam+cumulus+echo+retirement+annuity

This fund works by paying out a bonus for the amount of years that you contribute in total, you can stop payments if you want to. But the fees are now 2.8%.

So basically I want to know if you guys think I should move to doing this on my own through Coronation, I will then just invest in their Balanced Fund through an RA (so that I still get the tax benefit)? Or should I stay the course and go with this new product that they are recommending? My concerns with doing it on my own through Coronation is what if something happens to their fund and I lose a lot of money, where I am at now I have diversification.

Many thanks to whoever helps

Sanlam is, after Liberty the most predatory company in financial services in the history of this country. I would not trust them with my retirement.

The difference between a 0.4% annual fee (Sygnia) and a 2.8% fee results in a pension approximately 50% higher.

No wonder they can pay a bonus - but will this bonus make up for all the disadvantages:
-Inflexibility: penalties if you need to reduce premiums or want to move to another supplier.
-bad advice: their brokers are tied agents who have no knowledge of the bigger picture investment landscape. They are also very good salesmen, but their investment expertise is at a level where they are dangerous rather than helpful.
-You will become a target for other even worse products, which Sanlam is desperate to market eg. their toxic guaranteed investments.
-Poor service levels.
-Chronic under-performance because most of their funds are closet index funds (you basically get the index performance, but pay active management fees - so you are guaranteed to under-perform the index by the high fee).

Considering the low amount you have invested, I am sure you will be better off if you bite the bullet and pay the penalties to get away from Sanlam.
The best option to move to is Sygnia's RA using their cheap index fund portfolios.

As for your PPS RA - I think there is a way to convert it to a unit trust RA - which I think is the best option.
It seems you guys are victims of the war between Sanlam and PPS brokers for the old PPS RA business. I would not trust either side, but I would not make any decisions without talking to a broker from each side first.

 

[WireFree]

Not even with the fact that you get a bonus amount paid out to you if you invest over a period? The bonus looks to be rather decent.

At the end of the day it comes down the the fees and the duration of the investment.
If you look at the brochure at http://www.sanlam.co.za/wps/wcm/con...ERES&CACHEID=6805818040e9e0ab94b795f5138cdc58 and we work with the Emma example. According to my calculations if Emma starts at age 50, the 11% bonus is not that great and in this case it may be better for Emma go get an RA with a much lower admin fee. However, if Emma starts at age 20 then it may be a great product (also assuming the fee percentage does not increase in the 40 year period). Realistically, at 20 most people are students and are unlikely to invest in a RA. Anyway Sanlam have done their calculations based on when most people start investing in an RA and based on their income growth over the period.

You will need to do your calculations (or get a financial advisor to do them for you) and compare the different options over the term of your RA.

 

[Verde]

2) He sells both PPS and Sanlam products, he actually changed me from the one based on performance
3) I can stop them on this new product at any time without fees as far as I can remember

2) I am sure Sanlam pays a better commission - have you asked him?.
3) Get that in writing you are dealing with Sanlam here.

I cannot make out the size of the bonus from the brochure, it is as vague as can be. From experience, if a financial services company is not willing to spell out how something works in plain understandable language it is because they are trying to dupe their customers.

 

[WireFree]

As for your PPS RA - I think there is a way to convert it to a unit trust RA - which I think is the best option.

That would be great. Please advise how. You can post here or PM me.