Multiple-Access Investment Plan Liberty Investments

Wealth creation and liquidity need not be conflicting financial goals. Not with a MultipleAccess Investment Plan from Liberty Investments. This innovative investment product allows investors to enjoy liquidity with immediate and unrestricted access to their funds as and when required. The Multiple-Access Investment Plan provides access to world-class investment management and portfolios, some of which are not available as unit trusts.

•

The Multiple-Access Investment Plan utilises an endowment wrapper that has already been in existence for five years, thereby allowing immediate unrestricted access to the investment. The product has also been designed with the investor in mind – its tax-efficient wrapper, flexible options and transparent reporting put investors in control of their investment while maximising wealth.

Who should invest in a Multiple-Access Investment Plan? The Multiple-Access Investment Plan will be attractive to the following types of investors: • Investors who require ongoing access to their investment but who want to obtain the tax benefits offered by an endowment wrapper.

2

•

Investors who want a longer-term investment strategy, but who require access to their investment in the event of unforeseen circumstances. By utilising a Multiple-Access Investment Plan together with an Investment Plan, the investor: - has liquidity during the initial five years via the Multiple-Access Investment Plan to meet unforeseen costs; and - can create an endowment shell in combination with an Investment Plan or Flexible Investment Plan that will provide liquidity after five years without secondary capital gains tax implications in the investor’s hands. Retired clients who have a lump sum that they wish to invest with the option to make periodic withdrawals (withdrawals subjected to capital gains tax). Again, the Multiple-Access Investment Plan can be used in conjunction with an Investment Plan or Flexible Investment Plan.

Lives, like money, are spent. What are you buying with yours? Roy H. Williams

How the Multiple-Access Investment Plan works The investor takes cession of an endowment that has been in force for at least five years. A choice of risk-profiled and specialist portfolios are available, so investors can tailor the investment to their unique needs. Investors enjoy immediate unlimited access to their investment, but the money can also be left to grow in the portfolios of the investor’s choice until needed. Should the investor make periodic withdrawals, the investment value in the policy will reduce with every withdrawal. Note that withdrawals made from the MultipleAccess Investment Plan are subject to capital gains tax in the investor’s hands on any gain made. Further, periodic withdrawals constitute policy proceeds and should be declared as such on the investor’s annual income tax return. Although an investment into an Investment Plan or Flexible Investment Plan will be more tax efficient than a MultipleAccess Investment Plan, some investors cannot afford to lock their money away for five years as they require an income or liquidity. The Multiple-Access Investment Plan is perfectly suited to this scenario. Within legislative constraints, the investor can make additional payments into the Investment Plan or Flexible Investment Plan each year or two by taking an advance

4

against the Multiple-Access Investment Plan. Over a five-year period, the monies held in the Multiple-Access Investment Plan can be fully invested in the Investment Plan or Flexible Investment Plan. As the Investment Plan or Flexible Investment Plan has been in force for at least five years, the investor has unrestricted access to this money, and gains within this investment vehicle are not subject to capital gains tax in the investor’s hands. In this way the investor retains liquidity at all times, and increases the tax efficiency of the investment. Taking periodic withdrawals from the Multiple-Access Investment Plan allows the investor to utilise their annual capital gains exemption. No additional payments may be made into the MultipleAccess Investment Plan, instead the investor can buy another Multiple-Access Investment Plan. The minimum and maximum ages for taking up a Multiple-Access Investment Plan, is one and 85 next birthday respectively. The minimum premiums are as follows: • per policy: R50 000 • per investment portfolio: R10 000. The Multiple-Access Investment Plan is available to individuals, corporates, trusts and untaxed entities.

Let us look at an example: AN INVESTOR INVESTS R12 MILLION, SPLIT AS FOLLOWS:

INVESTMENT PLAN OR FLEXIBLE INVESTMENT PLAN • R2 million is invested in an Investment Plan or Flexible Investment Plan • Additional payments are made each year, funded from the Multiple-Access Investment Plan • Five-year restriction period on Investment Plan • One surrender available per policy in the first five years and one advance allowed after the first year

MULTIPLE-ACCESS INVESTMENT PLAN • R10 million is invested in a Multiple-Access Investment Plan • The R10 million is immediately accessible • Additional payments are made each year to the Investment Plan or Flexible Investment Plan • Capital gains tax implications in investor’s hands • No restriction period – immediate liquidity and flexibility

MULTIPLE-ACCESS INVESTMENT PLAN FULLY INVESTED IN INVESTMENT PLAN OR FLEXIBLE INVESTMENT PLAN After fifth year, immediate and unlimited access to funds in Investment Plan or Flexible Investment Plan without capital gains tax implications in the investor’s hands as policy is in name of original owner.

We are not here merely to make a living. We are here to enrich the world. Woodrow Wilson

5

Who can be nominated as beneficiary? The Multiple-Access Investment Plan offers two options for beneficiary nominations: • beneficiary for proceeds • beneficiary for ownership. By nominating a beneficiary for proceeds, the investor intends for the nominated beneficiaries to receive the proceeds of the policy on the death of the last surviving life assured. However, when an investor nominates a beneficiary for ownership, the investor’s intention is that this person should step into his/her shoes and become the owner of the Multiple-Access Investment Plan policy on the investor’s death. The policy will not cease to exist and the new owner i.e. ‘the beneficiary for ownership’ will not receive the proceeds, but instead the Multiple-Access Investment Plan policy will be deemed to be ceded to him/her absolutely. Example of a beneficiary for ownership nomination: The investor is the owner of a Multiple-Access Investment Plan policy and upon his death he would like his spouse to be able to continue with this policy. The investor selects the beneficiary for ownership option with his spouse as the nominated beneficiary.

6

Owner

Investor

Payer

Investor

Life Assured

Investor and spouse (As the intention is for the policy to continue upon his death, multiple lives assured must be nominated. He may nominate up to five lives assured.)

Beneficiary for ownership

Spouse

Beneficiary for proceeds

Not applicable

If the investor dies, Liberty Investments would act upon the beneficiary for ownership nomination and effectively cede ownership of the policy to the spouse on application. The spouse would then become the new owner of the policy and would be entitled to: • nominate a new beneficiary for ownership; or • nominate beneficiary for proceeds; and • add on lives assured.

Tailored product features The Multiple-Access Investment Plan provides investors with the following features that can be uniquely combined to meet their specific individual needs: • Immediate access to the investment, thereby providing liquidity. • The investor can choose to make systematic redemption payments. • The ability to combine the Multiple-Access Investment Plan with an Investment Plan or Flexible Investment Plan to retain liquidity at all times while increasing the long-term tax efficiency of the investment. • Investors who are concerned about markets falling soon after making their investment can elect to phase their investment into the portfolio of their choice from a money market fund. • The option to invest in portfolios that are professionally managed by leading asset managers, in accordance with an individually identified risk profile and with some portfolios only offered through Liberty Investments. • Alternatively, the investor can select up to seven different portfolios. These include cash, bond, property, equity and specialist portfolios – this allows investors to choose a combination of portfolios that meet their unique needs, and allows them to manage their investment more actively, while diversifying the investment across asset classes.

A minimum guaranteed death benefit applies. The death benefit consists of a lump sum equal to the greater of the total premiums and the full value of the investment (less any withdrawals). • Guarantees are available on certain portfolios for the peace of mind of a minimum guaranteed return. • Access to both local and offshore portfolios, allowing the diversification of investment risk across a number of geographical regions. • Switching between portfolios is allowed should investment needs change; no switching fees are currently paid (except for any buy/sell spread). •

Putting the investor in control Information is provided to investors that enables them to stay informed and in control of their investment: • The Liberty website, www.liberty.co.za, provides ‘Policy Servicing’ where investors can manage and monitor their assurance and investment policies with Liberty easily and in their own time. • Communication about the investment will be forwarded to the investor on a regular basis.

7

Lesoba Difference 10309 Mar 2010

LIBERTY INVESTMENTS Liberty Life Centre 1 Ameshoff street Braamfontein Johannesburg 0860 456 789 www.liberty.co.za

The information contained in this document does not constitute advice by Liberty Life. Any legal, technical or product information contained in this document is subject to change from time to time. If there are any discrepancies between this document and the contractual terms or, where applicable, any fund rules, the latter will prevail. Any recommendations made must take into consideration your client’s specific needs and unique circumstances. Past performances cannot be relied on as an indication of future performance. Investment performance will depend on the growth in the underlying assets, which will be influenced by inflation levels in the economy and prevailing market conditions. Liberty Group Ltd is an Authorised Financial Services Provider in terms of the FAIS Act (Licence no 2409). © Liberty Group Ltd 2010. All rights reserved.