Insurance products, especially capitalization products, are very popular as savings vehicles. Proposed tax reforms, if enacted, will align taxation of life products sold for savings purposes with that of bank and other investment products, while the tax benefits of life insurance sold for private retirement provision will be reduced. Unit-linked policies are less popular, though growing rapidly as insurance companies diversify into investment management. Due to increased tax evasion enforcement growth of these funds is expected to be low. The investment management companies sell certificates to individual investors which certify their ownership of a proportion of a specific fund.
Fund managers are likely to offer AS funds with aggressive or defensive allocation strategies.
AS funds are mutual funds with optional saving features. Investors will make an initial deposit, with additional contributions usually taking the form of automatic transfers from their bank accounts. Funds are intended to be held for 18 years or until the age of 60. With increased competition and as the initial establishment costs are recovered, the fees are likely to come down. Forty four investment companies plan to establish a total of 76 funds.