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PPS Endowment Plan

 

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The PPS Endowment Plan is a tax-efficient investment vehicle which is structured with the creation of long-term wealth in mind.

It is most suitable for investors with a marginal tax rate greater than 30% and a minimum investment time horizon of five years.

While access to capital is limited within the first five year or extended restriction period, the plan offers significant tax benefits. Taxable income (interest, net rental income and foreign dividends) is taxed at 30%, while realised capital gains attract capital gains tax at 7.5%. The proceeds of a withdrawal from the plan are tax-free in your hands. All tax reporting responsibility is removed from the individual.

The PPS Endowment Plan offers a simple and transparent cost structure and allows you unlimited flexibility in changing your underlying investments as well as in managing the timing of investments into the fund.

KEY BENEFITS AND FEATURES

Investment options

The range of PPS Preferred Funds offers a selection of multimanaged PPS unit trusts that provide clearly defined underlying investment choices. We also give you the choice of a selection of top-performing single manager unit trusts to ensure that you have a varied and well-defined range of alternatives.

Switching

You may change your investment options as often as you choose without incurring a transaction fee. Certain underlying fund managers do, however, charge an initial upfront fee for investment in their products, which would be applied upon your switch into those funds.

Transfers

You may not transfer this investment to another endowment policy or transfer another endowment policy into the PPS Endowment Plan.

Restriction period

The PPS Endowment Plan has an initial restriction period of five years. You may make additional contributions to the plan at any time, subject to set minimum investment amounts. Should the contributions, however, exceed 120% of the greater of your annual contributions in the prior two-year period, your investment will enter an extended restriction period for another five years from the date of the contribution.

Surrender value

You are entitled to one withdrawal during the initial restriction period of five years or any extended restriction period. The withdrawal value is limited to your contributions plus 5% compound interest per year. If the actual market value of the PPS Endowment Plan is less than the legal surrender limit, the market value (less any deductions such as tax) will be paid to you.

Withdrawals from your investment are not limited once the initial five-year restriction period, as well as any further restriction periods which may have applied, have expired.

Cessions

A PPS Endowment Plan may be ceded outright or partially.

Loans

You may not borrow from your PPS Endowment Plan. It may, however, be used as security should you need to access capital from a financial institution.

Death benefits

Upon your death, the proceeds of your investment will flow directly to your beneficiaries, tax-free. This will save your estate up to 4% (including VAT) in executor's fees.

Cooling-off period

A 30 day cooling-off period applies from the date that you receive your PPS Endowment Plan policy summary and terms and conditions.

Should you choose to terminate the investment within this period, your original investment will be returned to you but may be reduced as a result of market losses. This option will not be available to you if you have made any switches to your investment selection or if any benefit has been paid within the cooling-off period.

Minimum investment

  • Lump sum: R10 000
  • Recurring*: R 500 per month
  • Ad hoc: R5 000

* Minimum recurring debit order amount for a student member is R200 per month, which will escalate to the normal mimimum of R500 per month on qualification

Tax

Taxable growth (interest, net rental income and foreign dividends) is taxed at 30% and the proceeds of a withdrawal from the plan are tax-free in your hands. All tax reporting responsibility is removed from the individual.

COSTS AND CHARGES

Initial fees

The PPS Endowment Plan does not charge an initial fee on investment amounts, and an investment in any PPS multi-managed unit trust will not incur initial fees either. Should you, however, choose to invest with one of the underlying fund managers, an initial fee of 0,29% (including VAT) may be charged.

Ongoing fees

An ongoing administration fee of 0,8%, including VAT is charged annually on the PPS Endowment Plan. The fee is reduced by applying considerable 'partnership savings' that we have negotiated with the underlying fund managers. The annual administration fees that you pay are reduced by the full extent of these savings as follows:

Scenario 1

PPS Endowment Plan investing in a PPS multi-managed unit trust:

  • Annual administration fee 0,8%
  • Partnership saving 0,8%
  • Net annual administration fee 0%
Scenario 2

PPS Endowment Plan investing in a third-party single-manager unit trust:

  • Annual administration fee 0,8%
  • Partnership saving 0,46%
  • Net annual administration fee 0,34%

• Please note that partnership savings offered by third-party fund managers differ
• All fees quoted are inclusive of VAT

The annual management fees for the underlying unit trusts are fully disclosed on the investment option schedule.

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