Press release -
Discovery Invest Innovates for a structurally superior retirement fund offering
Johannesburg, 15 December 2021 – Discovery Invest has announced an innovation in its shared value model that enables clients to achieve greater offshore exposure in their retirement offering and more liquidity than any other retirement solution available in South Africa.
The Discovery Invest shared value model for retirement savings incentivises clients to adopt the behaviours that are proven to lead to the best long-term savings outcomes.
This is done by offering boosts of up to 20% of the value of their investments in qualifying Discovery funds, as a reward for investing more, for longer.
Clients now have the option to invest these boosts entirely offshore, in United States Dollars, in Discovery’s global multi-asset funds managed through its partnership with the world’s biggest asset manager, BlackRock.
This market-first innovation effectively allows investors greater offshore exposure in their retirements savings than is possible through any other South African retirement vehicle.
Gaining increased exposure to offshore investments works to add both geographical and currency diversification to an investment portfolio while enabling access to investment opportunities that are not available locally.
Both theory and evidence show that optimal diversification can work to reduce risk, while potentially enhancing returns, of a long-term investment portfolio.
However, when saving through a retirement fund, Regulation 28 of the Pension Fund Act limits the amount of one’s foreign investment exposure to 30% of the total value of one’s savings held in the fund. Further restrictions apply in terms of the amounts that can be withdrawn as cash at retirement.
“The boosts we provide to clients sit outside of, and rewarded over-and-above, their retirement plan and are therefore not restricted in the same way as the underlying funds,” says Craig Sher, head of product and development at Discovery Invest. “This means that while client’s core retirement plan are affected by these regulations, the boosts we provide are not.”
“This uniquely allows us to create a structurally superior retirement offering for clients,” adds Sher. “The new product effectively allows our clients to invest more broadly including in international markets, to enjoy potential better growth opportunities. Additionally, retirement funds have limitations in terms of how much can be taken in cash at retirement, but our boosts can be paid out fully at that stage to provide our clients with more liquidity than would traditionally be possible.”
Alongside the innovation Discovery has announced that it is increasing the boosts through a limited time offer of up to a 27,5%. Until 24 February 2022 clients will be able to get a higher boost and can opt to invest it internationally through BlackRock.
Different boost percentages apply depending on the term of investment and the portion invested in qualifying funds. For the current offer of a higher boost, clients will still receive the same amount of up to 20% in boost at the age of 65 with the extra boost from the current offer paying out five years later.
Switches or withdrawals out of qualifying Discovery funds before age 65 will reduce the boosts. Clients in lump sum retirement products tend to remain in them until retirement, hence the vast majority of clients will be invested to receive their boost.
Product rules, terms and conditions apply.
Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life assurance, short-term insurance, savings and investment and wellness markets. Since inception in 1992, Discovery has been guided by a clear core purpose – to make people healthier and to enhance and protect their lives. This has manifested in its globally recognised Vitality Shared-Value insurance model, active in 27 markets with over 20 million members. The model is exported and scaled through the Global Vitality Network, an alliance of some of the largest insurers across key markets including AIA (Asia), Ping An (China), Generali (Europe), Sumitomo (Japan), John Hancock (US), Manulife (Canada) and Vitality Life & Health (UK, wholly owned). Discovery trades on the Johannesburg Securities Exchange as DSY.
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