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Tax-free savings accounts can help South Africans achieve their financial goals as part of a holistic financial plan

06 March 2015 Sanlam

South Africa has a poor and fast deteriorating savings culture and decisive action is required from government, industry and the private sector to address the challenge.

As Wealthsmiths, Sanlam is serious about its role to support and encourage savings. We, therefore support the objectives of National Treasury in the launch of tax-free savings accounts, which are aimed at encouraging medium to long term savings, while giving people the option to access their funds at any time.

The tax-free savings account is another tool available to people to help them meet their financial goals over the longer-term, and a proper financial plan taking into account all your financial needs will enable you to make the most of an investment in a tax-free savings account.

Sanlam has developed a number of tax-free savings products to support these objectives and to cater for different categories of clients. Sanlam appeals to clients to obtain financial advice to ensure that their decisions on savings products match their personal requirements and forms part of a holistic financial plan.

People will benefit most from the tax-free savings accounts (TFSA) if they invest for the long term since only R30 000 can be invested in a TFSA per tax year, with a lifetime contribution limit of R500 000. It will take more than 16 years to reach this limit if you invest your full R30 000 per year.

No dividend, capital gains and income tax will be payable on the accounts, as long as the contributions stay within Treasury’s threshold amounts.

Sanlam will offer the following TFSA products:

Sanlam Tax-free Investments, offered by Sanlam Life
The Sanlam Tax-free Investments product offers people the opportunity to earn tax-free returns on their investment and the product is designed to comply within National Treasury’s principles of simplicity and transparency.
Sanlam Tax-free Investments have two tailored investment options:

1. A comprehensive option with the flexibility to make investment fund choices from R500 per month;

2. A simplified core option that offers low-cost access to a Satrix lifetime investment option from as low as R300 per month.

To dovetail with National Treasury’s aim of incentivising more individuals to save, Sanlam has taken the Sanlam Tax-free Investments product to the next level by introducing the concept of social savings groups.

Social savings groups allow people to significantly cut the administration charge on their Sanlam Tax-free Investments product by encouraging friends and family to take out their own Sanlam Tax-free Investments product and join their social group. The more people in their social group, the cheaper the administration charge for everyone in that group.

Sanlam believes its Sanlam Tax-free Investments product is an ideal tax-incentivised cost-effective alternative to save for a specific purpose, given that it has two investment options, a simple, transparent charge structure and excellent flexibility.

The Sanlam Investments Tax-Free Unit Trust and Satrix Tax-free Unit Trust, offered by Sanlam Investments

Sanlam Investments will offer two easy-to-open products: the Sanlam Investments Tax-Free Unit Trust and the Satrix Tax-Free Unit Trust. These products will offer all the flexibility and accessibility associated with a unit trust.

Sanlam Investments has made a comprehensive fund range with no performance fees and competitive pricing available for the Sanlam Investments Tax-Free Unit Trust. The full range of Satrix funds are also available, offering access to Satrix’s expertise and market index returns with limited deviation from the index. The normal recurring contribution minimums of R200 for Sanlam Investments funds and R500 for Satrix funds apply.

Glacier will also offer a Tax-Free Investment Plan which grants access to a range of funds on their platform and encourages investors to consult their financial advisers to ensure appropriate choices, in the context of their overall investment portfolio.

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