Sanlam Life Namibia has declared excellent bonus rates on its Stable Bonus Fund. The bonus rates for the 2006 bonus year are between 25.25% and 25.75%, depending on the tax treatment of the policy. These excellent rates are the result of excellent performance by Sanlam Investment Management and the bull run on the equity markets.
The Stable Bonus Fund aims to offer smooth growth from year to year as far as possible. This means that the bonus rates for a particular year do not necessarily equal the investment performance achieved in that year. In times of high returns, part of the actual growth may be held back. This is then added in times of low returns, to smooth out bonuses over a number of years. The investment fund therefore offers investors protection against volatile markets. The Stable Bonus Fund satisfies the needs of investors that want exposure to the equity markets and need protection against volatile markets.
For endowment policies the declared bonus rate for 2006 is 25.25%. The corresponding bonus rate for retirement annuity policies is 25.75%.
The investment returns that have been experienced during the last few years, and consequently the bonus rates that we declared, were exceptional in the current low inflation environment.  These investment returns is unlikely to be consistently repeated in the current low inflation environment.
Inflation beating returns over medium to long term
The history of the Stable Bonus Fund shows that it has beaten inflation over the medium to long term. This clearly shows how policyholders have retained the purchasing power of their retirement and savings money. Over the medium to long term we would expect investment returns closer to the inflation rate. Currently the inflation rate is between 5% and 6% per annum.
Further good news: arrear bonuses paid out again
Sanlam Life Namibia has also decided to pay increased bonuses in arrear in respect of all Stable Bonus policies that matured between 1 October 2006 and 1 March 2007. Maturity values for these policies were calculated on the previous lower bonus rates.
The additional payments will reflect the higher bonus rates and may increase the original maturity value by between 7% and 14%. For endowment policies the additional payment will be made directly into the bank account of the policyholders, whereas on retirement annuities it will take the form of a one-off increase to the income on the compulsory life annuity purchased from the proceeds.