Last Updated on 24/10/2024 by Carl-Peter Lehmann
When it comes to financial services in South Africa, PPS for Professionals stands out as a unique provider. Founded in 1941, PPS has built its legacy on the concept of mutuality, offering tailored financial solutions to graduate professionals. As members ourselves, we have a deep understanding of how PPS Investments and the PPS Profit Share can significantly enhance long-term wealth. In this deep-dive, we’ll explore the ins and outs of the PPS offering to help you maximise its benefits.
The Mutuality Advantage: You’re More Than a Policyholder
PPS’s mutuality structure sets it apart. As a mutual company, PPS is owned by its members, not shareholders. This means profits are reinvested for the benefit of members, creating a long-term, sustainable financial relationship. One of the most distinctive features of its mutual system is the PPS Profit-Share Account™, where members accumulate a portion of the company’s annual profits.
Members who hold multiple PPS products can significantly benefit from these profit accumulations, which grow annually and are paid out when members retire. This isn’t just a small rebate or cashback—members can build up substantial reserves over time.
The mutuality model ensures that members not only benefit from the products they hold but also share in the overall success of the company, making it a win-win relationship. For professionals, this long-term perspective aligns closely with the idea of building sustainable wealth through PPS Investments and leveraging the PPS Profit Share structure.
Core to the ethos of PPS’s mutuality is the commitment from its members to enable future graduate professionals to live the lives they want to live. As the mutual that serves the professionals that serve South Africa, PPS is very much focused on education as the most effective way of building resilience for South Africa, and it’s a critical component of ensuring South Africa will be a good investment in 10- or 20 years time. The business, together with its members are focused on ensuring that we have a big stream of professionals who continue to help grow our economy in our country. And as a mutual, PPS can take a long-term perspective on that because it can look at the whole education ecosystem and where we should best intervene to try to help sustain it.
How the PPS Profit-Share Account™ Works
The PPS Profit-Share Account is one of the most distinctive and powerful features that sets PPS apart from other financial services providers. It’s an integral part of their mutuality model, meaning that as a member of PPS, you not only benefit from their financial products but also share in the company’s overall success.
Member Ownership: As a mutual company, PPS doesn’t have external shareholders. Instead, members own the company, and the profits are distributed among members.
Product-Linked Contributions: The more PPS products you have, the greater your share of profits. Holding life insurance, income protection, and wealth management products together with PPS, for example, will help you accumulate more profit share than someone with just one product.
Profit-Share Growth: The amounts credited to your PPS Profit-Share Account™ grow annually based on PPS’s profitability, offering a unique form of wealth accumulation not tied to market returns.
Cross-Product Booster: If you hold multiple PPS products, your profit share is boosted. This Cross-Product Booster incentivizes members to consolidate their insurance, investment, and wealth management needs with PPS, as it leads to a higher profit allocation across all products held.
Accessing Your PPS Profit-Share:
One of the key advantages of the PPS Profit-Share Account is its long-term compounding effect. Over decades of membership, this account can accumulate to a significant sum, especially for professionals who begin their relationship with PPS early in their careers. Unlike traditional financial products that simply provide cover or returns based on market performance, the Profit-Share Account grows year by year by the operating profit that the business creates. The non vested Profit share is invested on the members behalf and is subject to external market volatility.
1. At Retirement: You can access the full balance of your Profit-Share Account when from age 65, offering a substantial financial boost during retirement.
2. Upon Claims: Some claims on PPS products may trigger access to a portion of the Profit-Share Account, depending on the terms and conditions of the policy.
3. Transfer to Investments: Members also have the option of transferring their profit share into PPS investment products, allowing it to grow further as part of a tailored financial strategy.
Case Study: Real-Life Impact of PPS Profit Share
Two of our clients recently retired with over R2 million vesting from their PPS Profit-Share Accounts. In both cases, the amount far outweighed the premiums they had paid over their lifetimes. This showcases the long-term value of being a PPS for Professionals member, where both product benefits and profit sharing provide significant financial security.
For many professionals, the PPS Profit-Share Account offers a robust way to accumulate wealth over the long term. The profit share accumulates annually, and when combined with PPS Investments, members can use their accounts strategically for retirement or to transfer their profits into further investment opportunities.
How Operational Profitability Are a Win For You
For many years, Sanlam handled the administration of PPS’s financial products and services. However, from 2007, PPS made the strategic decision to take over their administration in-house. This transition has had a significant impact on the company’s operations and profitability.
By bringing the administration under its own control, PPS has been able to streamline processes, improve service delivery, and gain greater control over client data and interactions. This has allowed the company to tailor its services more closely to the unique needs of its members. The improved efficiency has not only enhanced the member experience but has also had a positive effect on profitability.
With reduced dependency on external providers, PPS has lowered administrative costs, which in turn has boosted the profit-share distributed to members. This strategic move highlights PPS’s commitment to maximizing the value provided to its members while maintaining a sustainable and profitable business model.
The PPS for Professional Comprehensive Product and Service Suite
PPS offers an extensive range of financial products and services designed specifically for professionals across various industries, including medicine, engineering, law, and accounting. These services are designed to protect members’ income and grow their wealth over the long term:
1. Life Insurance: Comprehensive life cover that ensures your loved ones are financially secure should the unexpected happen.
2. Income Protection: One of PPS’s flagship products, this protects your income if you’re unable to work due to illness or injury.
3. Retirement Solutions: PPS offers solutions to help members plan for a comfortable retirement, including retirement annuities and pension plans.
4. Health Insurance: Tailored medical aid and gap cover products ensure that members are covered for their health needs.
5. Short-Term Insurance: PPS provides insurance for personal and professional assets, including home and vehicle insurance as well as Health Professions indemnity cover.
PPS’s Income Protection product is one of the most robust and comprehensive solutions available to professionals. It is designed to ensure that your income is protected if you are unable to work due to illness, injury, or other qualifying conditions. As a graduate professional, your ability to earn is your greatest asset, and PPS understands the importance of safeguarding that.
In premium comparison alone, it may seem more expensive than the traditional life assurance company “income replacers” – but it is in the comprehensive of the cover that sets PPS apart.
Key Features of PPS Income Protection:
1. Sickness Benefit from Day One: One standout feature of PPS’s Income Protection cover is that it starts paying out from day one of your sickness or injury, provided that the illness or condition lasts for at least seven days. This ensures that members do not have to worry about delayed payments or waiting periods, offering peace of mind during those crucial early days when you’re unable to work. You do not even have to prove a loss of income
Personal experience: Last month I was struck down from Swine Flu and an upper respiratory infection that kept me from working for 11 days. A week after submitting my claim. PPS paid out 11 days worth of insured income, tax free into my bank account.
2. Full Cover During the COVID-19 Pandemic: PPS demonstrated its commitment to its members during the COVID-19 pandemic by providing comprehensive income protection, even for situations beyond direct illness. Members who tested positive for COVID-19 were covered during their illness. Moreover, if a member had to quarantine because a family member was infected, PPS also provided cover during this period. This extended benefit ensured that professionals could focus on recovering or caring for their loved ones without the added stress of financial loss during the quarantine.
3. Flexible and Tailored Cover: PPS’s Income Protection policies are flexible and can be tailored to your specific needs. Whether you’re a medical doctor who cannot perform surgeries or a lawyer unable to meet court dates, the cover is designed to suit your unique profession and circumstances. The policy takes into account both temporary disabilities, where you might only need cover for a short period, and permanent disabilities that could affect your ability to work in the long term.
PPS Investments - Family Pricing on the Investment Side: More Savings for Loved Ones
PPS Investments also offer family pricing on its investment products, making it easier and more cost-effective for members’ families to benefit from PPS’s wealth management services. By leveraging family pricing, members can ensure that their loved ones receive the same high-quality financial products and services while enjoying a more favourable fee structure. This feature helps build financial security for the entire family, all while keeping costs manageable.
Example:
Mr and Mrs, both have R5million Rand on the PPS Investment platform. The admin fee charged on platform for this amount is 0.33%. Simply by linking it for family pricing, they are able to reduce their admin fee to 0.22%. That is a saving of R11 000 per annum. Compounded over time, this can make substantial difference to their overall investment outcomes.
PPS members can link their family members who do not qualify for PPS but hold assets on their OPN platform. These members can then earn the profit share on their family members investments who do not qualify for PPS.
Commitment to Social Good: PPS’s CSI Initiatives
PPS is dedicated to making a positive impact on society through its Corporate Social Investment (CSI) initiatives. A key focus is education, which aligns with the company’s mission to support the professional community in South Africa. By investing in bursaries, scholarships, and educational programs, PPS is actively contributing to the development of future professionals. Their work includes over 1,500 students passing through their LEAP Work Readiness Programme and an investment of R150 million in educational initiatives. Such efforts emphasize the company’s dedication to creating a sustainable future for South Africa while benefiting PPS members through enhanced PPS Profit Share opportunities.
Conclusion: Why PPS for Professionals Stands Out
PPS is more than just a financial services provider. It is a mutual society that offers graduate professionals access to world-class financial products while allowing them to share in the company’s success through profit sharing. With its Cross-Product Booster, family pricing for investments, and impactful CSI initiatives, PPS continues to provide exceptional value to its members.
If you’re a professional looking for a financial partner that understands your unique needs and provides tangible long-term benefits, PPS may be the right fit. Contact us at Henceforward to learn how we can help you leverage your PPS Membership for a more secure financial future.
Disclaimer: We are not necessarily promoting PPS or endorsing it over other financial service providers. However, as members ourselves, we have a deep understanding of its products and the unique benefits and features they offer. Our aim is to provide insight into these offerings based on our personal experience. Should you feel that PPS may be appropriate for your needs, we are more than happy to discuss how their products could align with your financial goals.
Steven Hall
Steven Hall is the Founding Partner and Director of Henceforward. He is a CERTIFIED FINANCIAL PLANNER with over 20 years experience and a long-time PPS Member. He has helped many PPS Members optimize their benefits for long-term success.
