Insurers must come clean on RAs
EVERY time a coconut: when this column raises questions about retirement annuities I get more responses from readers than on any other subject, save perhaps gold. “China, are you white-knuckled and do you have bulging eyes? Somebody stuck it to you like the rest of us!” crowed reader Reonewaycastle on bdlive.co.za, suggesting my RA’s investment managers had interfered with me in a fundamental way.
The negative tone of readers’ letters (see page 11) requires more interrogation. Using my RA as a test case, I sent Marius Kock, client-care complaints officer for retail insurance at MMI, queries about many troubling aspects of retirement savings products in general.
I will report back once Kock has responded but, in the meantime, it would benefit all RA contract holders to pepper their investment managers with questions.
South Africa prides itself on the transparency of its financial system, but one suspects retail clients have been lost in all the self-congratulations. Long-term investors, in particular, might feel that their nest eggs have been neglected.
My original Protea Life contract (bought in 1996) lives on. But, in the tumult of consolidation in the insurance sector, it has mutated into a foreign object. Confusion has been made worse by lack of communication from MMI, the JSE-listed entity that absorbed my RA first into Metropolitan then Momentum.
This week, MMI’s Kock, stung by last week’s Bull’s Eye, made an apologetic
Old-school insurers are embarrassed about the ‘legacy’ products sold in the cowboy years of the 1980s and 1990s
appearance. Kudos to him. With luck it suggests more willingness in the industry to deal with aggrieved contract holders.
In today’s asset-management bullring, old-school insurers are embarrassed about the “legacy” products sold in the cowboy years of the 1980s and 1990s. Boo-hoo: it’s time for them to man-up and tell us what they are going to do about it.
Among the questions we want answered concern perennial gripes:
The portion of invested cash diverted tolife cover;
Commissions paid over the life of the contract to a policy’s salesman;
Promised returns. Under new management, unbeknownst to me, my RA now hopes to beat CPI plus 7%. I would love to be told it is matching that lofty mark. If not, is it beating any other cheap, indextracking, product I might have invested in?
Underlying investments. Records provided by MMI’s Kock show the bulk (more than 30%) of my RA’s parent fund Prosure’s holdings are in MOM Glb Agg Subfund CI A. This told me nothing. I Googled MOM Glb Agg Subfund CI A; I learnt nothing. Will I ever?
So ja. Let’s see.