and into the futureconsultant-toolkit.sanlam.co.za/wp-content/uploads/2017/... · 2019-06-03 · It...

Sanlam Umbrella Fund2016 Trustee Report

and into the future

3

IndexPrincipal Officer’s Message 4

Fund Governance and organisational structure 5

Looking back at the past year 11

A glimpse at future developments 18

Annexures and further information 21

4

Principal Officer’s Message

It has been a year of much activity and change for the retirement fund industry! 2016 has also been a busy year for the Sanlam Umbrella Fund and great work has gone into improving the Fund for the ultimate benefit of our members.

One of the major developments over the past year was the implementation of the Revenue Laws Amendment Act 2016 (known as T-Day). This directly impacted the Fund and our Administrator had to make significant adjustments to its systems to be able to implement the new legislative requirements. We are pleased to report that this project has been completed successfully and that our administration platform is also ready to accommodate the anticipated annuitisation of provident fund contributions in 2018.

One of the significant achievements for the Fund during this year was the introduction of continued membership options. These new options allow our members to remain in the Fund without the hassle of transferring their member share when resigning or retiring.

It is critical to us that our members are able to experience good retirement outcomes; therefore a lot of our focus remained on the empowerment of our members. During 2016, we delivered a number of industry-leading digital innovations that we believe will significantly enhance our guidance and support to members and go a long way towards member empowerment.

• Our Day One tools help members embark on a good retirement plan when they join employment.

• My Retirement App helps members gain effortless access to their fund investment on their smartphones.

• Our Retire-mate Fund counselling service offers members access to online retirement planning support, backed by telephonic support from a Fund counsellor.

Two years ago the Sanlam Umbrella Fund was awarded the IRFA best practices Award for Fund governance and risk management. We maintain these best practices and continue to monitor a number of indictors in terms of our governance assurance approach. These indicators continued to be positive during this term and confirm that despite all the new projects and developments the fundamentals remain sound and true.

We are pleased with the Audit Sub-committee’s assurance that, in their opinion, the Admin- istrator keeps proper books and records, has employed sufficient internal control procedures, that the financial statements reflect all financial transactions undertaken by the Fund and that the audited financial statements for the Funds are a fair reflection of the status and the activities of the Funds.

Despite the large number of death claims received on a monthly basis, the Death Benefits Allocation Sub-committee applies the protocol, forms, procedures and calculatorsdeveloped by the Fund over many years to distribute members’ death benefits efficiently and in a consistently fair and reasonable manner. The Fund has not had a PFA determination against an allocation for years. We cannot over-emphasise the importance of members completing their beneficiary nomination forms with up-to-date information.

The Sub-committee for Insured Benefits Management reported that the overall claims experience of the Sanlam Umbrella Fund continues to be managed well, and this has

5

Fund Governance and Organisation StructureIn order to ensure that members’ best interests are maintained, the Sanlam Umbrella Fund has implemented a sound and comprehensive governance structure. The Fund was the first to implement a structure that includes

joint forums

an annual general meeting

sub-committees and

to adopt the King III Code of Governance

served to protect our members against insurance premium increases.

The number of enquiries/administrative complaints filed has remained at relatively low levels and reflects well on the Administrator and the processes and procedures implemented by the Fund. By far the majority of matters referred by the FSB and the Adjudicator for attention was of an enquiry in nature and can be seen as an extension of the member education and support function. The team recalls one adjudicator decision that went against the Fund in 2012.

The Sanlam Umbrella Fund is a direct beneficiary of the Sponsor’s (Sanlam) ongoing research and monitoring of the industry, with projects such as the Benchmark Survey, and other industry influencing and thought leadership projects.

The Fund also benefits from the Sponsor’s considerable investment in its IT systems and technology to improve the member experience and ensure economies of scale.

In the report that follows, we reflect in more detail on the past year and give you a glimpse at future developments for the Sanlam Umbrella Fund. This reporting encompasses the five separate legal entities that make up The Sanlam Umbrella Fund:

• The Sanlam Umbrella Pension Fund• The Sanlam Umbrella Provident Fund• The Sanlam Futura Umbrella Retirement

Fund• The Sanlam Plus Pension Preservation Fund • The Sanlam Plus Provident Preservation

Fund

Kobus HanekomPrincipal Officer: The Sanlam Umbrella Fund

Sanlam appoints trustees to serve on the Board. They are:

Derek Smorenburg Marius Jönas Jolly Mokorosi Marius Saayman

Sanlam-appointed trustees Alternate Sanlam-appointed trustee

How is the Sanlam Umbrella Fund managed?The Fund is managed by a professional Board of Trustees and Fund Officers.

Joelene Moodley Alex Paterson Ian McDonald Freddy Muswede

Independent trustees Alternate Independent trustee

Members elect the independent trustees that serve on the Board. They are:

Kobus Hanekom Erina le Grange

Fund Officers manage the day-to-day operations of the fund. They are:Principal Officer Deputy Principal Officer and

head of the Fund Secretariat

See annexure A

for more details on the current

Board of Trustees

6

The Fund’s formal structure, which includes a variety of legislative and professional parties, ensures that members’ monies are safe.

7

The Board of Trustees and Fund Officers are supported by eight Sub-committees that:

• take care of specific day-to-day issues

• formally report to the full Board which remains responsible for taking final decisions

The individuals who chair and make up these Sub-committees have a wealth of experience in the retirement fund industry and manage these Sub-committees according to specific guidelines. Members of the Board of Trustees serve on each of these Sub-committees.

Administration Audit

Communications Complaints

Death Benefits Allocation

Governance & Risk

Insured benefits Investments

See annexure B

for the feedback from the

Sub-committees

The Sponsor

The Insurers• Sanlam Employee

Benefits• Liberty Life

Contracted Benefit

Consultant

Joint Forum50/50 split

Employer & Member

representation

The Sub-committees are:

Board of Trustees and Fund Officers

50% member elected

50% Sanlam expert personnel

8

An important governance aspect – Joint ForumsA joint forum is the platform for members and employers to consult (within the spirit of the Labour Relations Act, No. 66 of 1995) and decide on their group retirement benefits. Every sub-fund within the Sanlam Umbrella Fund should establish a joint forum and this forum should meet at least once a year.

Joint forums

Participating employers

For Mini-funds (sub-funds with fewer than 50 members and less than R5 million assets) it might be cost-effective to either:

• Meet every two years, or

• Attend Centralised Joint Forum meetings organised by the Board of Trustees for multiple Mini-funds

Employer Representatives

Employee Representatives





9

What backs the Sanlam Umbrella Fund?The Fund is backed by Sanlam. Sanlam provides the necessary professional and technical resources so that the Fund can deliver a relevant product to members and employers. Sanlam also takes responsibility to provide:

• promotional and marketing support to ensure ongoing economies of scale and market relevance

• guidance on stakeholder communication and disclosure strategies, employing the latest infrastructure and technology

• guidance on benefit structures/offerings which align with the needs of various groups of members and employers, are easy to understand, convenient to use, offer outstanding value, and are transparent and cost effective

• ongoing research and development to identify the changing needs of members and employers with a view to ensuring timeous adjustments and improvements that may be required

Sanlam provides the necessary capital to grow the membership of the Fund.

Sanlam’s huge balance sheet attests that members’ monies are secure.Sanlam values and subscribes to a system whereby ethics, personal and corporate integrity, and governance practices set the standards for compliance.

Sanlam also actively contributes towards sustainability. Of the 83 companies that were assessed for the JSE/FTSE Russel Index, Sanlam was among the top 30 to make the index in 2015.

Sanlam has been included in the Dow Jones Sustainability Index and is the only South African life insurer included in the emerging market index out of the 83 companies.

secure

Transparency in pricingThe Sanlam Umbrella Fund is the only commercial umbrella fund that published information on its charges in a research paper presented to the Actuarial Society of South Africa in 2011.We thereby ensure our members that we are committed to the highest levels of transparency.

We continue to campaign that the retirement fund industry must develop a standard way of reporting all charges to clients, and we are actively working with ASISA to develop an industry-agreed standard charges reporting measure that will become applicable to all commercial umbrella funds.

10

Investment Strategy / Portfolio Futura Option

Standard Option

Optimal Option

Comprehensive Option

In-Fund Preservation Members / Phased Retirees / In-Fund Living Annuitants

Sanlam Lifestage* √ √ √

Volatility Protection Strategy* √ √ √

Passive Lifestage Strategy* √ √ √

Sanlam Blue Lifestage Strategy* √ √ √ √

Sanlam Futura Strategy* √

SIM Balanced Fund √ √

SIM Inflation Plus Fund √ √

Sanlam Cash Fund √ √

SMM70 √ √

SMM50 √ √

SMM30 √ √

SMM Absolute Return CPI + 5% Portfolio √ √

Sanlam NUR Balanced Portfolio √ √

Allan Gray Global Balanced Portfolio √ √

Coronation Houseview Portfolio √ √

Investec Balanced Fund √ √

Sanlam Foord Balanced Fund √ √

Sanlam Prudential Balanced Fund √ √

Sanlam Allan Gray Domestic Balanced Portfolio#

√

Sanlam Allan Gray Global Balanced Portfolio#

√

Sanlam Coronation Houseview Portfolio# √

Sanlam Monthly Bonus Fund √ √ √

Sanlam Stable Bonus Fund √ √

Satrix (SWIX) Balanced Tracker Fund √ √

Glacier+ √ √

The Sanlam Umbrella Fund’s large and extensive product offeringTo cater to the investment needs of all its members, the Sanlam Umbrella Fund has a large product offering.

The Sanlam Umbrella Fund has been the first over a number of years in the market to introduce creative and new benefit structures. These include a new-generation lifestage default investment strategy with three different preservation portfolios that align with the 3 most popular annuitisation strategies.

It also offers a full range of investment portfolios including a smooth bonus portfolio, a passive lifestage strategy and portfolios via Glacier.

Members on the Comprehensive and Optimal options have the flexibility to invest via Glacier in its wide range of investment portfolios. The Sanlam Umbrella Fund’s investment menu includes:

* Trustee-approved and alternative default investment strategies# Closed portfolios – not available to new investors+ Subject to Glacier product minima and participating employer agreement

Looking back at the past year

Investment updateOnce again we report a very pleasing set of investment returns to our members.

See annexure B

for investment returns on the

member choice menu

*The composite returns are shown taking into account the change in the underlying investment strategies during July 2013.

Lifestage strategy (Accumulation phase)*

Volatility Protection Strategy

Sanlam Blue Lifestage Strategy

Passive Lifestage Strategy

Sanlam Futura Default Strategy

15%

10%

5%

1 year returns 3 years returns 5 years returns

20%

0%

Performance on Trustee-approved default investment strategies

11

12

Sanlam Umbrella Fund membership numbers as at 30 June 2016

160 000

140 000

120 000

100 000

180 000

80 000

60 000

-

Sanlam Umbrella Fund Assets under management as at 30 June 2016

25 R’Bil

20 R’Bil

15 R’Bil

10 R’Bil

30 R’Bil

5 R’Bil

0 R’BilDec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16Dec-08Dec-07

40 000

20 000

Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16Dec-08Dec-07

Fund growth as at June 2016The graphs illustrate the continuous growth path of the Fund since its inception in 2007.

13

Annual rate revisionThe annual revision of all fees and insurance premiums took place on 1 March 2016 and we are pleased to report that the Sanlam Umbrella Fund continues to deliver real added value to our participating employers and members.

Administration fee changes have on average been kept well below the official inflation rate for Sanlam Umbrella Pension Fund and Sanlam Umbrella Provident Fund and kept to the absolute minimum for Sanlam Futura Umbrella Retirement Fund.

See annexure C for more on

the annual rate revision

Financial overview of the FundThe financials of the Fund remain sound according to the Audit Sub-committee and, in their opinion, the Administrator keeps proper books and records, has employed sufficient internal control procedures, that the financial statements reflect all financial transactions undertaken by the Fund and that the audited financial statements for the Funds are a fair reflection of the status and the activities of the Funds.

The annual financial statements can be viewed on the Retirement Fund Web www.retirementfundweb.co.za or it can be inspected at the registered office of the Fund, situated at 2 Strand Road, Bellville.

New trustees were elected and appointedThe Fund held its fourth trustee election last year whereby trustees were elected and, in some cases, re-elected by the members of the Fund.

The new member-elected trustees are:

• Joelene Moodley

• Freddy Muswede

Sanlam also appointed a new trustee:

• Jolly Mokorosi

See annexure A

for more detail on the current Board

of Trustees

new trustees

14

New In-Fund options were introducedThe world of retirement is currently going through its most intense period of change and the Sanlam Umbrella Fund is at the forefront of new developments. We were the first fund to launch an In-fund Living Annuity option, which means

members can now seamlessly go from being a contributor to the Fund to withdrawing a pension from the Fund at extremely low costs to the member.The three new options that were introduced not only offer members highly cost-effective savings solutions after exiting employment, but also offer members the opportunity to continue to enjoy the very strong governance of the Sanlam Umbrella Fund.

Our aim is to provide a simple and convenient pre- to post-retirement path for our members.

Options available to members:

03The In-Fund Living Annuity: Retired members can draw a monthly pension from the Fund.

01In-Fund Preservation: Members that leave their employment before they retire, can leave their money in the Fund.

02Phased Retirement: Members that retire, can postpone the payment of their retire ment benefit until a later date.

15

Day One tools to help members save enough The first day of employment includes a lot of administration work and forms to be completed. One such form is the application to become a member of the company retirement fund – something that is seemingly very unimportant on day one. But our research has indicated that the first day of employment can be crucial in terms of retirement provision as employees are required to pick a contribution level which can have a material impact on their standard of living in retirement.

To assist members with this decision, and to provide them with a tool they can use to determine their replacement ratios, the Sanlam Umbrella Fund offers employers and members the Day One tools.

The Day One tools consist of:

• A short video that explains how a retirement fund operates and the importance of calculating a replacement ratio.

• A replacement ratio calculator that is simple enough to help members see first-hand what their retirement outcome will be and what they can do to improve it.

The tools may be accessed online @ https://www.sanlam.co.za/institutional/retirement/umbrellafund/Pages/member-and-employer-tools.aspx

My Retirement App places information in the palm of our members’ handsSanlam Umbrella Fund members can now download the My Retirement App from the Google Play Store or Apple App Store.

The trustees of the Fund are hopeful that the App will assist in creating a new generation of members that are engaged with their retirement planning from an early age.

The App not only allows members to view their information, but also to interact with the information.

16

My Retirement App (continued)

The App provides members with easy access to:

• A view of their current retirement savings & benefits (including insured benefits)

• Information on where their money is being invested

• Investment fact sheets and educational content

• A retirement calculator, which gives insights into how well they are doing in saving towards retirement

• E-mail facilities to their HR, for updating any of their personal information or to request that additional voluntary contributions be made to their retirement savings

• Important contacts and links

Retire-mate, the online Fund retirement counselling service for membersThe Fund counselling service offers members access to a convenient online retirement planning support and guidance service that is backed by telephonic support from a retirement benefit counsellor.

This service is one of a kind in the umbrella fund industry.The service offers members:

• The opportunity to make well-informed decisions about their retirement savings

• Information on setting goals, the impact of costs, the benefits of starting early, delaying retirement, and how to catch up if they started late

• Information on managing a budget, determining an investment strategy, preserving savings when leaving a job

• Detailed steps to take when approaching retirement, including information on different types of annuities and the most suitable options.

The Retire-mate counselling service has been rolled out to a selection of members, but eventually will be available to all members.

Members’ contributions are now invested much quickerLast year we reported that we were embarking on a project that would significantly enhance the way retirement contributions are received from employers and allocated to members’ records.

The roll-out of the new electronic contribution process has been met with great success and on average, over the last year, more than

99% of clients using this new process had their contributions invested within 2 days and 96% within 1 day.There are a number of benefits in this new way of administration, but mainly it:

• Is simple and efficient, with no room for errors

• Leaves the employer completely in control

• Routes member data directly through to the Sanlam administration system

What’s happening with the Government’s process on retirement reform?We place great emphasis on leading the South African retirement fund reform debate for the ultimate benefit of our members. We also believe that commercial umbrella funds, such as the Sanlam Umbrella Fund, represent the future face of the retirement fund industry. We are living the creed “retirement reform in action”!

Unfortunately the impetus from Government appears to have lost further ground over the past year. Although the tax deductibility harmonisation of pension funds, provident funds and retirement annuity funds became a reality from 1 March 2016, the thornier annuitisation aspects of T-Day were postponed by a minimum of two years. It also appears that the implementation of the Retail Distribution Review plans is on hold for a while yet.

See Annexure D for more on Retirement

Reform

17

Name change for the Sanlam Futura Umbrella Retirement FundIt has been proposed to change the Sanlam Futura Umbrella Retirement Fund’s name to the Sanlam Unity Umbrella Fund. The Fund Secretariat is currently applying for FSB approval and registration.

We will keep all members and employers updated on the progress of this.

A glimpse at future developments

Sanlam Umbrella Solutions, a division within Sanlam Employee Benefits, sponsors the Fund and ensures that we have a highly competitive product, providing true value for money to our members.

Over the past few years, significant additional investment has been made by the Sponsor and they are committed to continue to invest in the Fund. In the near future, members and other stakeholders can look out for a number of new and exciting services and value adds currently being developed by the Sponsor.

01

18

19

Enhanced member web experienceThe member web portal is being enhanced and will in future provide a lot of useful information to members as well as access to tools and calculators that will assist them with reliable retirement planning.

02

Enhanced web experience for intermediaries and administratorsA number of enhanced and new functionalities are currently being developed for the web portal used by intermediaries and HR-administrators. We believe these enhancements will benefit our clients and streamline the interaction between them and the administration platform. The enhancements are being released in phases, with the first phase starting towards the end of September 2016.

03

20

Direct communication with members via SMS and in-App notificationsWith more than 80% of members’ contact details now on record, we are now in a position to communicate directly with our members. Members should look out for educational information from the Fund to their cell phones.

Guaranteed annuity optionsWe will be extending our In-fund annuity options to include a guaranteed annuity option.

Reduced short-term insurance ratesWe will shortly be in a position to offer (exclusively to Sanlam Umbrella Fund members) reduced short-term insurance rates via Santam.

Holistic employee benefits solutionsWe are moving towards offering our members holistic employee benefits solutions that include healthcare services and a medical aid offering.

04

05

06

07

Annexuresand further information

21

22

Sanlam Umbrella Fund Trustees and Fund Officials

Derek SmorenburgSanlam-appointed trustee (first appointed 1 July 2007)

Marius JönasSanlam-appointed trustee (first appointed 1 August 2009)

Jolly MokorosiSanlam-appointed trustee (appointed 1 March 2016)

Derek Smorenburg has been a Sanlam-appointed trustee since July 2007 and is the current elected chairman of the Board of Trustees of the Sanlam Umbrella Fund. He has more than 50 years’ experience in the financial services industry. In 1986 he registered the Reinforced Pension and Provident Funds as the first commercial multi-employer umbrella funds in South Africa. He later sold the associated administration business to Sanlam, and then headed Sanlam’s specialist umbrella fund business for many years. Derek is recognised as a pioneer in the retirement fund industry, and has been widely acclaimed in the press for some of the innovative ideas he has introduced over the years, with a particular focus on strong governance and client service delivery.

Marius Jönas is the chief executive officer of Futura SA Adminis-trators and is the current elected chairman of the Sanlam Futura Umbrella Retirement Funs. He has more than 20 years’ experience in the financial services industry (specifically as a financial adviser, fund trustee, principal officer and chairperson). Marius established the Futura Umbrella Retirement Fund in 1998. Under his manage-ment and leadership, and as a result of his keen understanding of this specific segment of the market, the fund membership has expanded drastically and continues to grow. Marius has served as an executive consultant within Sanlam Umbrella Solutions since February 2009, and is the chairman of the Sanlam Futura Umbrella Retirement Fund.

Jolly Mokorosi was elected as an independent trustee on 1 January 2016. A short while thereafter on 1 March 2016 she accepted an appointment as a Sanlam-appointed trustee on the Sanlam Umbrella Fund. Jolly is the chairman of the Board of Trustees of Moriting Retirement Fund and a trustee of the South African Dental Technicians Employees Umbrella Fund. She holds a BCom degree and has 14 years’ experience in retirement funds, with various trustee positions held, including that of the principal executive officer of the Municipal Councillors Pension Fund.

Annexure

A

23

Marius SaaymanAlternate Sanlam- appointed trustee (first appointed 1 July 2007)

Joelene MoodleyIndependent trustee (elected 1 January 2016)

Alex PatersonIndependent trustee (re-elected 1 January 2016)

Ian McDonaldIndependent trustee (re-elected 1 January 2016)

Marius Saayman was appointed as alternate Sanlam-appointed trustee to the Sanlam Umbrella Fund in July 2007. Marius completed a BCom Accounting (Honours) at the University of Stellenbosch and served his articles with Brink, Roos & Du Toit (now PriceWaterhouseCoopers), before qualifying as a CA (SA). He joined Sanlam in 1980 and fulfilled a number of roles in the group finance department, subsequently serving as chief financial officer of various business units - including Sanlam Employee Benefits. Marius previously represented Sanlam on the boards of various subsidiaries and currently serves on the board of trustees of 10 retirement funds. He completed an advanced management diploma at UNISA and received a BCom (Honours) in financial management from the University of Cape Town. Furthermore, he attended the executive development programme at the Manchester School of Business. Although Marius retired at the end of 2014, he is still very active in the retirement industry.

Joelene Moodley has been newly elected as an independent trustee. She has 7 years’ retirement fund experience in various positions at the Government Employees Pension Fund (GEPF) and served as the acting principal executive officer of the GEPF for 18 months. Joelene holds a Masters degree in Law, BProc and an LLB degree. She is a director in the corporate and commercial division of Rooth and Wessels Attorneys and has extensive employee benefits industry experience.

Alex Paterson was appointed as an independent trustee of the Sanlam Futura Umbrella Retirement Fund in 2004 and was elected as an independent trustee of the Sanlam Umbrella Fund since August 2009. He is the current chairman of the Sanlam Plus Preservation Fund. He holds a master’s degree in business administration with undergraduate degrees in Arts and Social Science, and runs his own management consultancy firm. He has over 30 years experience in Human Resource Management and is a Master Human resource Practitioner with the SA Board of Personnel Practice. Alex is widely involved in consulting, training, education and development. He has also developed a range of training programmes in management and human resources.

Ian McDonald has been an elected independent trustee on the Sanlam Umbrella Fund since July 2007 and has been the chairperson on the death benefits allocation sub-committee for the Fund since being appointed. Ian has in excess of 57 years’ experience in retirement funding and is the founder member of the Pension Lawyers Association of South Africa. He held the position of assistant adjudicator with the Pension Funds Adjudicator from 1999 to 2004. Ian specialises in the legal and technical aspects of retirement funding and acts as an independent professional trustee to retirement funds.

24

Freddy MuswedeAlternate independent trustee (elected 1 March 2016)

Kobus HanekomPrincipal Officer

Erina le GrangeDeputy Principal Officer

Freddy Muswede has been newly elected and became the alternate independent trustee on the Sanlam Umbrella Fund from 1 March 2016. Freddy has 17 years’ experience in actuarial, investments and employee benefits consulting. He holds an Advanced Post Graduate diploma majoring in investments and is also a Certified Financial Planner. Muswede Financial Solutions is the company that he owns which specialises in offering group retirement fund solutions to small and medium size companies.

Kobus Hanekom is the executive principal officer of the Sanlam Umbrella Fund, and is the head of strategy, governance and compliance at Simeka Consultants & Actuaries. He studied Law, and completed B.Iur. and LLB degrees, and was admitted as an attorney, conveyancer and notary in 1983. Kobus is also a qualified Certified Financial Planner and was a founding member of the Pensions Lawyers Association of South Africa. He served as that organisation’s president for its first two years. Kobus authored volume 1 of The Manual on South African Retirement Funds (currently in its 22nd edition) and is a regular speaker at industry conferences and workshops.

Erina le Grange is the deputy principal officer of the Sanlam Umbrella Fund and heads the fund secretariat based in the Sanlam Head Office in Bellville. Erina has been active in the retirement fund industry since 1985, with a specific emphasis on managing administration service delivery for some of Sanlam’s largest retirement fund administration clients. She obtained her diploma in retirement fund management in 2004 and a certificate in business management in 2006.

25

SUB-COMMITTEE FUND CHAIRED BY TITLE

Administration Sub-committee

All funds Mike O’Donovan Chief Executive Officer Sanlam Employee Benefits: Core

Audit Sub-committee All funds Marius Saayman Consultant: Financial Management

Communications Sub-committee

All funds Dalene Bennett Head: Communications Sanlam Employee Benefits

Complaints Sub-committee

All funds Kobus Hanekom Head: Strategy, Governance and Compliance Simeka Consultants & ActuariesPrincipal Officer, Sanlam Umbrella Fund

Death Benefits Allocation Sub-committee

Sanlam Umbrella Fund and Sanlam Plus Preservation Fund

Ian McDonald Owner and Retirement Fund Counsellor IMREFCO

Sanlam Futura Umbrella Retirement Fund

Erina Le Grange Head: Fund Secretariat Sanlam Employee Benefits Umbrella Solutions

Governance & Risks Sub-committee

All funds Kobus Hanekom Head: Strategy, Governance and Compliance Simeka Consultants & ActuariesPrincipal Officer, Sanlam Umbrella Fund

Insured Benefits Management Sub-committee

All funds Mike O’Donovan Chief Executive Officer Sanlam Employee Benefits: Core

Investments Sub-committee

All funds David Gluckman Head: Special Projects Sanlam Employee Benefits

Sub-committees and their feedback reportsThe following sub-committees are active for the Funds

Annexure

B

26

Administration Sub-committee feedbackThe service level agreement between the Fund and the administrator documents the expected level of service deliveries against which the Board measures the administrator’s service delivery. It is the duty of the Administration Sub-committee to monitor this agreement.

The regulatory governance and compliance of the Fund is sound. This is evidenced not only by monitoring our various service-level agreements and other measures, but also in the general feedback we receive from our participating employers and their consultants. The administrator has made a considerable investment in technology to improve service delivery, reporting and make the Fund more scalable. This has been positively received by employers and intermediaries alike and has enabled the development of alternative digital engagement tools for our members. The number of enquiries/admin complaints filed via the Fund secretariat has remained at relatively low levels and reflects well on the administrator. The majority of complaints received was more of a query in nature and should be seen as an extension of the member education and support function.

Considerable time and resources were spent to implement the regulatory changes required by the Revenue Laws Amendment Bill 2016. We are pleased to report that this project has been completed successfully and that our administration platform is ready to accommodate the anticipated annuitisation of provident fund contributions in 2018.

During the past twelve months the Fund has grown by 11 400 members and an additional R4.1 billion assets under management. This continual growth in the Fund’s membership has been capably absorbed by our administrators.

Audit Sub-committee feedbackThe Audit Sub-Committee is responsible for the duties assigned to it by the Board of Trustees in addition to those duties and responsibilities that they may have as members of the Board. The deliberations of the Sub-committee do not reduce the individual and collective responsibilities of Board members in regard to their fiduciary duties and responsibilities, and they continue to exercise due care and judgment in accordance with their legal obligations.

The key responsibility of this Sub-committee is to verify the accuracy of the Fund’s annual financial statements and other related financial reports. The Board of Trustees is pleased with this Sub-committee’s assurance that, in their opinion, the administrator keeps proper books and records, has employed sufficient internal control procedures, that the financial statements reflect all financial transactions undertaken by the Fund and that the audited financial statements for the Funds are a fair reflection of the status and the activities of the Funds.

The Board approved the following Financial Statements:

• Sanlam Umbrella Pension and Provident Funds - approved on 22 June 2016

• Sanlam Futura Umbrella Retirement Fund – approved on 26 November 2015

• Sanlam Plus Preservation Fund – approved on 22 June 2016

The external auditors issued unqualified audit reports for all funds.

Communications Sub-committee feedbackThe Communication Sub-committee, as constituted by the Board of Trustees, is responsible for delivering the communication to all stakeholders. The information is intended to educate and empower members to take control of their own financial destinies and, in so doing, arrive at good retirement outcomes. The Sub-committee continuously explores new ways to increase the effectiveness of communication.

The Fund’s Communication policy document sets out the communication responsibilities of the Board of Trustees towards the members and other stakeholders. The strategy allows for a multipronged approach to communication, which means a wide variety of channels is used for communication with all stakeholders.

27

The 24th Sanlam Benchmark Survey (Annexure E) once again revealed that more needs to be done to ensure members are empowered and are frequently reviewing their retirement savings position. The Survey also indicated that 90% of the respondents owned a smartphone and have access to the internet. These results suggest that a large percentage of members could be reached through digital communication methods.

During 2016, the Sanlam Umbrella Fund delivered a number of industry-leading digital innovations that will significantly enhance communication to members.

Members’ personal contact details on recordIn order for members to benefit from the new digital innovations, they will need to register on the new Sanlam Secure Services Portal. Members will only be able to register successfully if their contact details on record are up-to-date. The Administrator has put in a huge effort to obtain and update the personal contact details of all members of the Sanlam Umbrella Fund, but there is still a portion of members for which there is no up-to-date contact details on record.

We are therefore encouraging participating employers to update their members’ contact details during the monthly electronic contributions process. Each member needs to have either a cellular phone number or e-mail address on record.

Members can expect certain communication from the FundMembers are encouraged to ensure they receive all information issued from the Fund and should make enquiries with their Human Resources department if they did not receive the communication listed here.

• A printed annual benefit statement• The new member guide• A member participation certificate• Quarterly electronic newsletter• Annual trustee report• Monthly investment fact sheets• Quarterly investment updates

The Fund also communicates to members on certain life events• Members that exit the Fund for instance on resignation, retirement, disablement etc. should

ensure they receive the relevant communication items that aims with assisting them in making the right decisions. Information is provided on all the options available, taxation applicable, possible deductions as well as the procedure that will follow in each event.

• Members that are going through a divorce should ensure they obtain the information brochure which explains the procedure to follow and the options available to them.

Progress on compliance with Treating Customers Fairly (TCF) principlesThe Communication Sub-committee follows the Sanlam Group’s Governance Framework policy when developing the Fund’s communication material. This defined process is intended to meet the requirement of Outcome 3 as outlined by the Treating Customers Fairly (TCF) programme, with specific emphasis on the use of plain language in communication. All the Fund’s communication items have been reviewed in terms of this process and the Communication Sub-committee is pleased to report that the Fund’s member communication is nearly 100% compliant.

28

Complaints Sub-committee feedbackWe have a formal complaints register where every complaint is logged by our Fund Secretariat, and actions are assigned and thereafter the complaint is tracked to conclusion. It is the duty of the Complaints Sub-committee to monitor the complaints register continually, working together with our administrators.

Sanlam Umbrella Pension and Provident FundsMany of the complaints attended to during the past year were first filed with the Pension Funds Adjudicator or the FSB. Almost all of these complaints, however, were in the nature of administrative enquiries which could have been explained and resolved by the administration enquiry desk or could have been dealt with much more efficiently in terms of the Fund’s internal complaints procedure. Based on an assessment of the complaints in terms of the Treating Customers Fairly principles, the single biggest area of concern remains withdrawal benefits. In the past it often related to delays experienced in the processing of the claim on the part of employers. The Fund has over the past year implemented sophisticated new IT programmes which will track and process withdrawals efficiently on a monthly basis. In addition we will be rolling out increased information and training material to make sure that employers and members understand the process and that their expectations are properly managed.

Sanlam Futura Umbrella Retirement FundAccording to the Sub-committee only a handful of complaints were lodged during the review period. The good news is that these were enquiries of an administrative nature and have since been resolved. The Fund regards all complaints and queries as an opportunity to provide constructive feedback.

Sanlam Plus Preservation FundNo complaints were filed with the Fund.

Death Benefits Allocation Sub-committee feedbackThe payment of benefits to members (on their retirement) or to their dependants (in the event of their untimely death in service) is an important function of the Fund. The role of this Sub-committee is to ensure that members’ death benefits are distributed as quickly as possible, and in the fairest and most reasonable manner.

The collection and assessment of the information gathered by the Fund administrators, and the application of the complex provisions of section 37C of the Pension Funds Act which governs the allocation of benefits, is carried out by our dedicated team of specialists in this field, who interact directly with the deceased member’s employer and family in order to ensure that all potential beneficiaries are identified, and that the most appropriate use is made of the benefits available for their welfare.

Sanlam Umbrella Pension and Provident FundsOn average, 42 death claims were received each month. We are assisted in the payment of Death Benefits by the increasingly large number of members who complete beneficiary nomination forms and deposit them with their HR departments.

Sanlam Futura Umbrella Retirement FundOn average, 25 death claims were received each month. Getting completed nomination forms remains a challenge as only 40% of claims received included a nomination form. To date the committee did not have any PFA determinations against the allocations made.

We are constantly reviewing our procedures to ensure that we maintain the very high standards we set for ourselves. It cannot be over-emphasised how much the existence of beneficiary nomination forms with up-to-date information on those who depend on the member for maintenance, can speed up the payment of much-needed benefits to the families of deceased members.

29

Governance and Risks Sub-committee feedbackEnsuring the proper governance and compliance of the Fund is becoming more and more complex and the risks of loss or fines are significant. This Sub-committee monitors and manages a number of controls, and based on these results they are required to provide the board with the assurance that the Fund’s systems and processes are effective.

The committee maintains a fund governance and risk management plan. Other factors taken into consideration include the progress made in complying with the Code of Responsible Investing in South Africa (CRISA) and the (very positive) ratings it achieved in respect of the King III Code of Corporate Governance and the Treating Customers Fairly (TCF) assessment launched by the Financial Services Board.

Sanlam Umbrella Pension and Provident FundsThe Sub-committee is happy to report that the Fund meets its compliance requirements. It has developed strategies to comply with T-Day, phased retirement and a number of other new requirements and developments.

Sanlam Futura Umbrella Retirement FundThe Sub-committee is happy to report that the Fund meets its compliance requirements.

Sanlam Plus Preservation FundThe Fund adopted all the protocols and procedures employed by the Sanlam Umbrella Fund and introduced rule amendments to align the rules of this fund with the Sanlam Umbrella Fund. The Sub-committee provided the Board of Trustees with the governance assurance that all the indicators are positive and they are satisfied that the Funds are in compliance. An aspect that continues to receive special attention is the maintenance of personal contact details of each member.

Insured Benefits Management Sub-committee feedbackThis Sub-committee is responsible for performing all functions as is necessary to provide participating employers with the most competitive risk products set out in the Fund in Detail.

Sanlam Umbrella Pension and Provident FundsInsurance premium rates were reviewed as part of the 1 March 2016 annual revision exercise. The Sub-committee reported that the overall claims experience of the Sanlam Umbrella Fund continues to be managed well, and this has served to protect our members against insurance premium increases.

Sanlam Futura Umbrella Retirement FundThe insured benefits claims experience of the Fund’s approved benefits has steadily improved. The interventions implemented by the Sub-committee are having the desired effect and has enabled the risk insurer to maintain their risk rates for 2016. The Sub-committee continues to look at ways to further improve this experience, through prudent management of pricing and risks so as to protect against anti-selection. This is positive for our members as a good claims experience mitigates the risk of future premium rate increases.

Investments Sub-committee feedbackThis Sub-committee reviews and evaluates the appropriateness of the investment policy statement of the Fund and all its investment offerings set out in The Fund in Detail document, as amended from time to time, on a regular basis or whenever a major event occurs.

Once again we can report a very pleasing set of investment returns to our members. The following annualised returns were achieved over different periods ending 30 June 2016.

30

Member Investment Choice Menu: Investment returns

1 Year Returns

16%

14%

12%

10%

8%

6%

%

4%

2%

18%

SMM

70

P

ortf

olio

SMM

50

P

ortf

olio

SMM

30

P

ortf

olio

SMM

Ab

solu

te

Ret

urn

CP

I +5

% P

ortfl

oio

SIM

Bal

ance

dF

und

SIM

Infla

tion

Plu

s F

und

Sanl

am

Cas

h F

und

Sanl

am A

llan

Gra

y D

omes

ticB

alan

ced

Sanl

am F

oord

B

alan

ced

Fun

d

Inve

stec

B

alan

ced

Fun

d

Satr

ix (

SWIX

) B

alan

ced

Tr

acke

r F

und

Sanl

am M

onth

ly

Bon

us F

und

Sanl

am S

tab

le

Bon

us P

ortf

olio

Alla

n G

rayG

lob

al

Bal

ance

d

Cor

onat

ion

Glo

bal

Hou

sevi

ew

Sanl

am N

UR

B

alan

ced

Fun

d

Sanl

am P

rud

entia

lB

alan

ced

Fun

d

3 Year Returns

16%

14%

12%

10%

8%

6%

%

4%

2%

18%

SMM

70

P

ortf

olio

SMM

50

P

ortf

olio

SMM

30

P

ortf

olio

SMM

Ab

solu

te

Ret

urn

CP

I +5

% P

ortfl

oio

SIM

Bal

ance

dF

und

SIM

Infla

tion

Plu

s F

und

Sanl

am

Cas

h F

und

Sanl

am A

llan

Gra

y D

omes

ticB

alan

ced

Sanl

am F

oord

B

alan

ced

Fun

d

Inve

stec

B

alan

ced

Fun

d

Satr

ix (

SWIX

) B

alan

ced

Tr

acke

r F

und

Sanl

am M

onth

ly

Bon

us F

und

Sanl

am S

tab

le

Bon

us P

ortf

olio

Alla

n G

rayG

lob

al

Bal

ance

d

Cor

onat

ion

Glo

bal

Hou

sevi

ew

Sanl

am N

UR

B

alan

ced

Fun

d

Sanl

am P

rud

entia

lB

alan

ced

Fun

d

n/a

5 Year Returns

16%

14%

12%

10%

8%

6%

%

4%

2%

18%

SMM

70

P

ortf

olio

SMM

50

P

ortf

olio

SMM

30

P

ortf

olio

SMM

Ab

solu

te

Ret

urn

CP

I +5

% P

ortfl

oio

SIM

Bal

ance

dF

und

SIM

Infla

tion

Plu

s F

und

Sanl

am

Cas

h F

und

Sanl

am A

llan

Gra

y D

omes

ticB

alan

ced

Sanl

am F

oord

B

alan

ced

Fun

d

Inve

stec

B

alan

ced

Fun

d

Satr

ix (

SWIX

) B

alan

ced

Tr

acke

r F

und

Sanl

am M

onth

ly

Bon

us F

und

Sanl

am S

tab

le

Bon

us P

ortf

olio

Alla

n G

rayG

lob

al

Bal

ance

d

Cor

onat

ion

Glo

bal

Hou

sevi

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Sanl

am N

UR

B

alan

ced

Fun

d

Sanl

am P

rud

entia

lB

alan

ced

Fun

d

n/a

CPI Rate

31

Retirement fund investments is about adding long-term value to members, and our focus remains on delivering inflation-beating returns over the longer term. The inflation rate, as measured by the increase in the Consumer Price Index, was 5.7 % per annum over the five-year measurement period. All the portfolios on the approved investment menu comfortably beat inflation over this period.

Continued effort is being made, in conjunction with the Communication Sub-committee, to improve the regular and appropriate communication on investment issues to our members.

The consolidated monthly Investment Fact Sheet offers the following information to our members and consultants:

• The performance versus benchmarks of the trustee-approved default investment strategies.

• The performance versus benchmarks of all portfolios on the approved member investment choice menu.

• All investment fees.

The Investment Sub-committee tackled the following key issues during this review period:

• A priority for this period was reviewing the available default investment strategies:

i. Independent Actuarial Consultants were engaged to conduct on independent review of Sanlam Lifestage as we continually try to implement improvements to benefit our members.

ii. Sanlam Blue Lifestage Strategy was implemented as the ideal default investment strategy underlying the new generation Optimal product option.

iii. The previous Passive Investor Strategy was upgraded to a Passive Lifestage Strategy.

iv. The Sanlam Futura default investment strategy has delivered outstanding results in keeping with its mandate.

v. So much so that following a significant investigation, the trustees resolved to amend the mandate of the Volatility Protection Strategy in line with the Sanlam Futura strategy – this change is currently in a consultation phase and will only be implemented during 2017.

• The three new membership categories of In-fund Preservation Members, Phased Retirees and In-fund Living Annuitants necessitated the formalisation of an investment menu for these members.

• Substantial work has continued to further improve the investment reporting to our clients.

There is much work to be done by the Investment Sub- committee, and we will continue to monitor and refine the investment offering taking into account the trustees’ fiduciary duty to our members.

32

Annual rate revision Annual Revision process for Sanlam Umbrella Pension Fund and Sanlam Umbrella Provident FundAdministration fee changes have on average been kept well below the official inflation rate. Although this average experience is very encouraging, it is important to note that each participating employer will experience either increases or decreases depending on their own unique circumstances.

The underlying principle is that we apply consistent formulae across the Sanlam Umbrella Pension and Provident Funds regarding every fee and every insurance premium i.e. we try as best as possible to be fair to all our members and participating employers, and to charge fees that reflect the actual workload and the actual underlying insurance risks. Investment switch fees and dissolution fees were discontinued during 2015.

As part of the revision process, we also obtained quotations for every insured benefit from the two Trustee-approved insurers being Sanlam and Capital Alliance. In cases where savings can be achieved by changing insurers, and where such a change is in the best interests of the members, we have made arrangements to change the insurers.

Consulting fees are not subject to an automatic review as part of the annual revision process. Consulting fees can be reviewed at any time by negotiation and agreement between the Contracted Benefit Consultant/Contracted Financial Adviser and the participating employer. A change in consulting fees is implemented via the Fund’s formal amendment process.

The contingency reserve account levy as from 1 March 2016 is R3.80 per member per month (including VAT).

Annual Revision process for Sanlam Futura Umbrella Retirement FundCost increases to this membership have been kept to the absolute minimum. The monthly administration fee remained unchanged. The administration fee is subject to participating employers utilising the Retirement Fund Web facility and failure to adhere to this will result in an additional administration fee being levied.

There have been no changes to Group Life and Disability and Family Funeral Aid insurance premiums or to investment management fees.

There have been no changes to consulting fees. These fees are not revised as part of the annual revision process.

The annual contingency reserve account levy has been reduced from 1 March 2016 from 0.50% to 0.25% of assets per annum including VAT, levied monthly.

From 1 March 2016 a new asset-based investment administration fee of 0.50% per annum including VAT will be introduced and levied monthly.

Annexure

C

33

Retirement Fund Reform

Unfortunately the impetus from Government appears to have lost further ground over the past year.

Although the tax deductibility harmonisation of pension funds, provident funds and retirement annuity funds became a reality with effect from 1 March 2016, the thornier annuitisation aspects of T-Day were postponed by a minimum of two years. It also appears that the implementation of the Retail Distribution Review plans is on hold for a while yet.

The reality in South Africa is that the labour movement has a powerful voice on these matters, and politicians need to take heed of such key constituencies. This makes significant reform of the retirement funds industry by way of regulatory change a challenge.

We remain positive because many of the key reform proposals are very consistent with our thinking e.g.

• encouraging fund consolidation

• improving fund governance

• retaining the role of the workplace

• simplifying plan design

• ensuring effective intermediation

• not to mention a continued, close focus on reducing charges to members in a sustainable manner.

Our members will be aware that we place great emphasis on leading the South African retirement fund reform debate for the ultimate benefit of our members. We also believe that commercial umbrella funds, such as the Sanlam Umbrella Fund, represent the future face of the retirement funds industry. We are living the creed “retirement reform in action”!

Annexure

D

34

At the time of writing, we await the release of an updated paper on comprehensive social security reform (this has been on hold since 2009) and an updated paper or possibly draft regulation of default investment strategies, default preservation and default annuitisation.

A second workshop between a Sanlam Umbrella Fund delegation and the Financial Services Board took place during April 2016. Such workshops are important to help develop future regulation for commercial umbrella funds that will result in better retirement fund outcomes for our members. The workshop was very useful to both delegations, and we were pleased that the Financial Services Board seemed impressed with many of the member-friendly initiatives being undertaken by the Sanlam Umbrella Fund.

Sanlam is also very active within the industry-body ASISA where work is far advanced on standard charges disclosures pertaining to commercial umbrella funds. This is a very positive development, as many of the current charging structures in the retirement funds industry are not well understood by our customers.

The Sanlam Umbrella Fund is committed to monitor retirement fund reform developments closely as these unfold, and to take a leading role in the reform debates in order to protect the interests of our members.

And we intend to proceed where we can with implementing enhancements to our own product offering consistent with the good principles underlying the key reform proposals (e.g. In-Fund Preservation and In-Fund Living Annuities were made available to our members over the past year).

We don’t have to, and won’t, wait for regulatory changes before taking steps that are likely to improve the retirement outcomes for our members.

Retirement Reform Changes

What you need to know

Over the last few

months, there have been a lot of uncertainty over the

Government’s new taxation laws that were supposed to come into

effect on 1 March 2016.

We explain what has been changed, what will not change now and how this will

affect you.

RETIREMENT REFORM CHANGES 1 March 2016

Sanlam Employee Benefits

What will change The same tax rules in relation to tax deductions on contributions will apply to all types of retirement savings funds; namely pension funds, provident funds and retirement annuity funds.

What will not change now Provident fund members will in future be subject to the same withdrawal limits at retire ment that are applicable to members of pension funds and retire ment annuity funds. Nothing changes when you withdraw before retire ment.

1 March 2016

POSTPONED TO 1 MARCH 2018

2

What is meant by ‘the same tax rules will apply to pension funds, provident funds and retirement annuities’?

Member contributes 10% of his salary to retirement savings

Member contributes 17% of his salary to retirement savings

Member contributes 27.5% of his salary to retirement savings

Member will be taxed on R9 000

R1 000tax free

Member will be taxed

on R8 300

R1 700tax free

Member will be taxed

on R7 250

R2 750tax free

You may contribute more than 27.5% of your salary to your retirement savings, but you can only claim a tax deduction up to the maximum of 27.5% of your salary and limited to a maximum tax deduction of R350 000 per year.

If your contributions exceed 27.5% and/or R350 000 in a tax year, you will be able to claim the balance (which you couldn’t claim in the current year) the following year(s). Any balance remaining when you retire or withdraw from service may be taken as a tax-free lump sum or be deducted from the tax payable on your annuity (pension).

Example: a member receives a salary of R10 000 per month

You now have much more control and can increase your retirement contributions in accordance with your retirement needs and the contributions will be fully tax deductible (subject to the maximums as prescribed by legislation and your fund rules).

How will this affect you?

This means that 27.5% of your salary

can be tax free.

From T-Day onwards, you will be able to get a total tax deduction on contributions to all types of retirement funds of up to 27.5%* of your salary (or taxable income.)

Pension fund

Provident fund

Retirement Annuity

3

This should have no negative effect on you or your take-home salary. In fact, if you make member contributions to a provident fund, you will now enjoy a tax deduction and an increase in your take-home salary.

How will this affect you?

There will also be a difference in how the contributions made to your retirement fund are treated from a tax perspectivePresent » You and your employer make separate contributions

From T-Day onwards » Your employer contribution will be added as a fringe benefit to your salary.

Your salary

Your salary

Tax deductible

Tax deductible

Not tax deductible

Employer contributions

to Pension and Provident

Funds

Employer contribution

Pension fund

Provident fund

All tax deductible

Your + employer

contributions to Pension and

Provident Funds

Your contributions

to Pension Fund

Your contributions to Provident

Fund

BENCHMARK SURVEY 2016 Research Insights

Overview of umbrella funds survey

Umbrella funds

This is the eighth consecutive year that we have undertaken a separate study on umbrella funds and, as a result, we’ve now accumulated suf�cient history to meaningfully analyse the emerging trends. Once again, we surveyed 100 employers that participated in umbrella funds.The survey was once again representative of the commercial umbrella fund market as 88% of employers (in line with overall industry trends) participated in one of the “Big 5” commercial umbrella funds sponsored by Alexander Forbes, Liberty, Momentum, Old Mutual and Sanlam.

It is quite exciting to note that, after three years of being constant, there has been a slight decrease in the average cost of administration as a percentage of salary. Coupled with the increase in total contributions, this has resulted in an increase in the total provision for retirement.

From the research it can be seen that there is a definite shift toward sponsor associated investment products. This might be contributing toward the lower operating expenses that can be observed.

by

Irlon TerblancheChief Executive O�cer

Sanlam Umbrella Solutions

and

Shakeel SinghChief Marketing O�cer


Annexure

E


Overview of umbrella funds survey

Umbrella funds

This is the eighth consecutive year that we have undertaken a separate study on umbrella funds and, as a result, we’ve now accumulated suf�cient history to meaningfully analyse the emerging trends. Once again, we surveyed 100 employers that participated in umbrella funds.The survey was once again representative of the commercial umbrella fund market as 88% of employers (in line with overall industry trends) participated in one of the “Big 5” commercial umbrella funds sponsored by Alexander Forbes, Liberty, Momentum, Old Mutual and Sanlam.

It is quite exciting to note that, after three years of being constant, there has been a slight decrease in the average cost of administration as a percentage of salary. Coupled with the increase in total contributions, this has resulted in an increase in the total provision for retirement.

From the research it can be seen that there is a definite shift toward sponsor associated investment products. This might be contributing toward the lower operating expenses that can be observed.

by

Irlon TerblancheChief Executive O�cer


and

Shakeel SinghChief Marketing O�cer



When it comes to active versus passive investing, employers prefer to invest in a combination of both. The popularity of active only and passive only investments has decreased from last year.

Participating employers in umbrella funds rarely change their asset manager, but when they do, the most prominent reasons are performance and inconsistency between the asset manager’s investment philosophy and actual actions.

Most Trustee choice / default investment portfolios can be described as a lifestage vehicle and, on average, more than three quarters of a participating employer’s assets are invested in the default investment option.

There seems to be a slight trend away from risk benefits as part of the umbrella fund package only, and risk benefits by way of a separate scheme only. Although risk benefits, as part of the umbrella fund package only, is still a very prominent feature, employers seem to be moving towards a combination of risk benefits that form part of the umbrella fund package, and risk benefits that form part of a separate scheme.

There seems to be shift away from just referring members to preferred financial advisers. More employers depend on their umbrella fund administrators to supply factual information about available options before members are referred to financial advisers.

From the survey results, it also seems that the recent hype around robo-advisers should not be over-estimated, and concomitantly, the continued role of the financial adviser should not be under-estimated.

It is very concerning that there was a significant reduction, from the employer’s perspective, on members’ ability to retain their current standard of living during retirement.

Following the implementation of the T-day changes, a large percentage of employers believe that umbrella funds are the best vehicle for members to use for additional retirement savings contributions, with many planning to actively encourage members to increase their contribution levels.

It is interesting to note that during this year’s survey, ease of administration has been pointed out as the number one reason for employers to move to umbrella funds, displacing cost savings which was last year’s primary reason. It was also interesting to note that reduced fiduciary responsibility, imposed on participating employers of an umbrella fund, was a much less prominent reason compared to last year.

When considering moving between umbrella funds, the top reasons cited were cost savings, investment performance and better communication or administration.

The survey results also indicated that a very large percentage of employers could be reached via electronic communication methods.

Contributions Remuneration packages are based on total cost to company for 64% in 2016 (2015: 65%) where the contribution rate to a retirement fund would not a�ect the cost of the employee to the employer but rather a�ect an employee’s take-home pay. The alternative would be to have the package structured as “cost plus benefits” where an employee’s contribution rate (benefit) a�ects that employee’s cost to the employer but not an employee’s take-home pay. That is, 64% of the employers’ remuneration packages are structured in a way that the contribution to a retirement fund is included in the salary as opposed to an add-on benefit.

Pensionable earnings (PEAR) is that portion of total remuneration which is pensionable. This is typically expressed as a ratio. 24% of sub-funds (2015: 28%) indicated that their PEAR percentage was less than 70%, with 44% of the respondents (2015: 23%) saying their fund’s PEAR was more than 90%.

48% of the employers have a total monthly pensionable salary bill of between 1 and 10 million rand and 54% of the employers have a total membership ranging from 40 to 300 members.

• The average employee contribution, as apercentage of PEAR, is 7.1% (2015: 6.4%).

• The average employer contribution, as apercentage of PEAR, is 9.5 % (2015: 8.8%).

Just over a quarter, 28% of the sub-funds (2015: 51%) allowed members to select their own level of contribution, whereas only 25% (2015: 33%) permitted members to elect their employers’ level of contribution.

40% of respondents (2015: 33%) indicated that the employer pays a fixed contribution only (i.e. total cost to company and no additional costs) and 50% (2015: 60%) indicated that the employer pays a fixed contribution plus the cost of administration and the cost of risk benefits. Thus we can see that expenses are having a bigger and bigger impact on provisions for retirement, as more employers move toward fixed contribution only (no additional costs).


Cost of administrationAfter three years of being constant at 0.8%, there has been a slight decrease in the average cost of administration as a percentage of salary, which is now at 0.7%. There is some further evidence that the model is working well for consumers as the umbrella fund industry achieves economies of scale. Similar to the BENCHMARK Surveys conducted in 2015, 2014 and 2013, this figure is lower than the comparable cost for standalone funds.

An increase in total contributions of 1.4% (2015: 1.1%) from last year and the reduction in expenses has resulted in an increase of 1.6% (2015: 1.4%) in the total provision for retirement.

2016 2015 2014 2013

Employee contributions 7.1% 6.4% 5.6% 5.6%

Employer contributions 9.5% 8.8% 8.5% 8.1%

Total contributions 16.60% 15.20% 14.10% 13.70%

Death benefit premiums (1.3%) (1.3%) (1.6%) (1.6%)

Disability benefit premiums

(1.1%) (1.2%) (1.2%) (0.9%)

Operating costs (0.7%) (0.8%) (0.8%) (0.8%)

Total provision for retirement

13.5% 11.9% 10.5% 10.4%

Following the implementation ofthe T-day changes, a large percentage of employers believe that umbrella funds are the best vehicle for members to use for additional retirement savings contributions.

“

“


Trustee choice 2016 2015

Lifestage 52% 59%

Guaranteed / smoothed bonus

26% 23%

Balanced active 14% 15%

Cash / money market 4% 3%

Investments A clear majority of 76% of employers surveyed (2015: 80%) o�ered member-directed investment choice.

Where member-directed investment choice was made available by the umbrella fund, 10.5% of sub-funds (2015: 5%) did not o�er this facility to any of their members. An average of seven investment options were o�ered to members, which is very much in line with previous years.

It seems that funds are automatically invested in ‘in-house’ investment portfolios that are associated with the sponsor for 51% of the employers (2015: 45%), whereas an estimated 11% (2015: 10%) are unsure whether this is the case.

Respondents claimed that, on average, 84% of their members (2015: 79%) were invested in the Trustee choice or default investment option.

The Trustee choice / default portfolio was classified as follows:

Investment portfolios by asset managers, other than the sponsor or its associated companies, are on o�er to 56% of participating employers (2015: 69%), while 28% of participating employers (2015: 19%) do not have this choice. 16% cannot confirm whether this is being o�ered or not.

46% of the respondents indicated that investment performance fees were charged on default and other portfolios, with 49% of participating employers indicating neither, and an additional 13% being unsure if this was the case or not.

Half the respondents (53%) indicated that they had a responsible investing policy in place, which incorporated ESG (environmental, social & corporate governance factors). 15% responded that they did not have a responsible investment policy in place.

Almost half, 47% of respondents (2015: 66%) invest in a combination of both passive and active investments, while 17% (2015: 22%) only active investments only, and 5% (2015: 7%) have passive investments only. Where passive investment choice is available, 45% of respondents (2015: 69%) indicated that cost savings was the key driver for selecting passive investments. The second most popular driver, at 12%, was cited as guidance from National Treasury. Employers seem to believe that there is value in both passive and active investing with cost savings remaining the key driver for passive investing.

84% of their members (2015: 79%) were invested in the Trustee choice or default investment option.

“ “


PerformanceThe average period over which asset managers’ performance is assessed, before a decision is made whether or not to replace them, is four years. A total of 22 respondents indicated that they had changed their asset manager in the past. The main reasons for the change were cited as performance (64%), inconsistency between investment philosophy and actual actions of the asset manager (23%), and fees (9%).

62% of the respondents thought that if a company was able to consistently deliver (over 5 to 10 years) on the benchmark, it could be considered a successful asset management company with a good track record.

Lifestage investingSlightly more than half, 52% (2015: 59%) of the Trustee choice / default investment portfolio can be described as a lifestage vehicle and, on average, 80% of a participating employer’s assets are invested in the default investment option. In a lifestage vehicle, members are switched to less volatile portfolios in the period prior to normal retirement age, which is commonly referred to as the phase-out period. The most common phase-out period is five years (for 50% of respondents) and six to seven years (for 13% of respondents). There has been a steady decline in the average length of this period over the last couple of years to 4.8 years (2015: 5.3 years).

Only 46% of respondents (2015: 43%) reported that their lifestage investment strategy was explicitly aligned to their annuity strategy.

The preferred type of annuities that the end-stage allows for are:

• Inflation-linked annuities:35% (2015: 45%)

• Living annuities:29% (2015: 36%).

• Guaranteed annuities (level or increasing):25% (2015: 39%)

• Index-linked annuity:10.4%

Benchmarks used for asset manager performance

CPI-related 28%

Peer group 25%

Indices 22%


Most, 83% of employers (2015: 89%) provide members with advice when they enter the phase-out period of the life stage model. This is understandable since it is very important to ensure that the employee’s phase-out period is aligned with their annuity strategy.

Insured bene�tsMost employers, 55% (2015: 60%) provide risk benefits as part of the umbrella fund package only, and 24% (2015: 25%) provide risk benefits by way of a separate scheme only. Some 21% (2015: 15%) provide risk benefits both as part of the umbrella fund package and as a separate scheme.

Slightly more than half, 51% of employers (2015: 55%) selected umbrella funds whose insured benefits are automatically underwritten by an ‘in- house’ insurance company associated with the sponsor.

Risk bene�ts – umbrella fundsThe most popular risk benefits provided as part of the umbrella fund package are death benefits at 97% (2015: 100%), disability benefits at 86% (2015: 84%) and funeral benefits at 62% (2015: 67%).

• The average lump sum death benefit is 3.1 times(2015: 3 times) times annual salary.

• The average lump sum disability benefit is 2.5times (2015: 2.1 times) times annual salary.

The death benefits remained fairly constant with lump sum disability benefits, slightly up from last year.

Risk bene�ts – separate schemesThe most popular risk benefits provided under separate risk schemes are funeral benefits 78% (2014: 73%), disability benefits by 76% (2015: 92%) and death benefits 64% (2015: 80%),

• The average lump sum death benefit is 3.3times (2015: 3.4 times) annual salary.

• The average lump sum disability benefit is 2.2times (2015: 2.6 times) annual salary.

Again the death benefits remained fairly constant, however the lump sum disability benefit was slightly decreased from last year.

Advice35% of consultants/brokers (2015: 35%) are remunerated by statutory commission and 52% (2015: 36%) negotiate a fee with the employer.

58% (2015: 69%) of sub-funds have a formalised strategy for rendering financial advice to members on exiting the fund.

When asked to describe the sub-fund’s strategy for rendering financial advice to active members, 28% (2015: 62%) indicated that they referred members to preferred financial advisers, while 52% indicated that the umbrella fund administrator provided factual information about available options and only then, if members required further advice, were they referred to the fund’s financial adviser.

Robo-adviceOnly 9% of participating employers believed that robo-advice could be a suitable and cheaper advice channel for members. A further 28% of employers believed that robo-advice – in conjunction with human support – could represent appropriate advice for their members. The vast majority of respondents (63%) were of the view that robo-advice would not be suitable for their members.


RetirementRespondents estimated that, on average, only 14% of their retirees (2015: 27%) would be able to retain their current standard of living in retirement.

Only 51% believed that the net replacement ratio (NRR) was a suitable measure for determining whether a member was on track for retirement. 29% of the employers believed that members did not understand this measure. Only 29% of sub-funds (2015: 45%) had a target NRR or Projected Pensions Ratio (PPR) that the Trustees actively worked towards. Of these employers, 62% (2015: 84%) indicated a default employer and employee contribution rate that was aligned with the stated target pension. 69% of these employers (2015: 76%) were targeting a replacement ratio of between 70% and 75%.

In assisting members with planning for their retirement, employers deploy the following tactics:

• 43% (2015: 51%) provide members with accessto a net replacement ratio (NRR) or similarcalculator

• 65% (2015: 49%) provide each member with aNRR statement each year / regularly

There seems to be less focus on providing members access to an NRR calculator and more focus on providing members with the actual NRR statement.

Employers consider the following annuities as most appropriate for an ‘average’ member:

39% of employers (2015: 54%) stated that the Trustees of the umbrella fund had either determined an appropriate default annuity product for their members, or were in the process of putting one in place within the next 24 months. It was interesting to note that 47% (2015: 23%) believed that this was not being done.

Of the 27% (2015: 25%) who had already selected a default annuity product, 26% (2015: 8%) selected a living annuity, 22% (2015: 32%) selected the guaranteed annuity, 22% (2015: 8%) provided an inflation-linked annuity and a further 11% (2015: 28%) opted for a combination of di�erent annuities.

2016 2015 2014 2013

Living annuity 34% 24% 30% 30%

Inflation-linked annuity 27% 25% 19% 35%

Guaranteed annuity (level or increasing at a

fixed percentage)18% 20% 23% 15%

Combination of di�erent annuities

12% 21% 20% -


Special topics

Journey towards retirement40% of employers believe that it is the member’s own responsibility to preserve their withdrawal benefit while 32% believe it is the employer’s responsibility. Also, 53% of employers do not track and monitor the progress of members towards achieving their desired retirement outcomes. Yet, 62% of employers are completely or at least to a large extent interested in the financial wellbeing of their employees. It seems that taking responsibility and motivating employees to preserve and track the progress of achieving desired retirement outcomes, with the support of skilled advisors and umbrella fund sponsors, would be an easy first step in the journey towards improving the financial wellbeing of employees.

T-DayAlthough the compulsory annuitisation aspects of T-Day were postponed subsequent to the surveyinterviews, it is nonetheless interesting to gaugeparticipating employers’ plans regarding T-Day:

• 41% of employers believe that the umbrellafund is the best vehicle for members to use foradditional retirement savings contributions,and 47% of participating employers are evenplanning to actively encourage their membersto increase contribution levels following T-Day.

• There appears to be widespread knowledgethat T-Day facilitates a more flexible approachto retirement fund contributions, with no lessthan 60% of employers reporting awarenessand 85% of employers actively planning tocommunicate the matter to members.

• Retirement annuities seem to be consideredas savings beyond the employer’s mandateand an overwhelming 80% reported no plansto encourage their members to make thesesavings product paid-up.

• Although there was much written in the pressabout members resigning from their jobs toaccess retirement savings in advance of T-Day,47% of employers had not considered any viewon the matter which might indicate that thetrend is not as widespread as had been fearedby policy-makers.

Competitiveness within the umbrella fund marketThe main reasons participating employers opted for an umbrella fund are similar to last year, although there are some changes worth noting:

• Ease of administration at 59% (46% in 2015)displaced cost savings at 55% (59% in 2015) asthe number one reason for joining an umbrellafund. Also interesting to note is that employersjoining umbrella funds to escape fiduciaryresponsibility was only 27% (45% in 2015), muchless prominent as a reason.

• 29% of participating employers (20% in 2015)reported that they sought comparable umbrellafund quotations in the market on an annualbasis.

• 22% of participating employers (19% in 2015)reported that they had considered movingbetween umbrella funds.

• Cost saving at 55% (58% in 2015), investmentperformance at 41% (32% in 2015) and bettercommunication or administration at 36%(37% in 2015) were the top three reasonsfor employers considering moving betweenumbrella funds.

On balance, these measures show encouraging signs that the umbrella fund market is steadily becoming more competitive, and that employers are making rational decisions regarding their choice of provider.

Communication90% of the respondents owned a smartphone and, of these, 88% were comfortable using both apps and web browsers on it. 93% of employers had access to the internet for fulfilling their duties to the fund. These results indicated that umbrella fund administrators could reach a very large percentage of participating employers through electronic communication methods.

46

RulesRevision

The following amendments to the Rules of the Sanlam Umbrella Pension Fund and the Sanlam Umbrella Provident were made during the review period and registered by Registrar of Pension Funds.

Amendment 2 was registered on 29 July 2015 and provides for:• a Member to postpone payment of his/her retirement benefit until a date after his/her

retirement from service, as elected by the Member. The Rules have also been updated with regard to the types of Paid-Up Members and their benefits. Part 13, which deals with Paid-Up Members, has been amended to incorporate Phased Retirees as there are many provisions that apply to both.

• the deduction from a Member’s Individual Account, the portion of the monthly group premium for risk benefits provided by the Fund, which exceeds the group premium the Employer pays for the risk benefits of all the Members in its service. The Rules are further updated with regard to the deduction and recovery of fees and expenses from the Individual Member Account.

• the new legislative requirements with regard to valuation exemption.• a Member to transfer his/her benefit to a preservation fund in the event of a transfer in terms

of Section 197 of the Labour Relations Act or to make it Paid-up in the Fund where there is no suitable pension or provident fund available.

• the fact that the Fund has established a Protocol with regard to the rectification of administrative errors, including the way profit or losses generated by such administrative errors are to be dealt with.

• the Board to arrange for guidance and support services to be provided by accredited financial service providers in order to assist Members and other persons with decisions regarding retirement and other benefits.

Amendment 3 was registered on 14 September 2015 and provides for:• the Board to take corrective action in cases where the services of the Contracted Benefit

Consultant leads to inefficiencies in the service delivery, pressure on performing within agreed service levels and increases the risks to the Fund and its members to levels that are not acceptable to the Board. This amendment enables the Fund to require an Employer to take corrective action and address or remove such risk to the Fund and its Members.

Amendment 4 was registered on 22 September 2015 and provides for:• the payment of living annuities from the Fund.• updating regarding the way that Risk Salary is to be determined, as the Insurer which underwrites

the Risk Benefits provided in terms of the Rules have introduced certain requirements and limitations in its Policy.

• the Board to approve general expenses of the Fund not provided for in the Rules.

Amendment 5 was registered on 15 February 2016 and provides for:• the changes brought about by the Taxation Laws Amendment Act, 2015, specifically to enable

Members to limit their contributions to the Fund to the maximum amount deductible in terms of income tax legislation, and to limit the amount that can be converted into a lump sum payment at retirement to that allowed in terms of the recently amended Income Tax Act.

Annexure

F

47

The Board resolved to revise the Rules of the Sanlam Futura Umbrella Retirement Fund. By doing so it made provision for legislative amendments and incorporated all previous registered amendments. The revised Rules were registered by the Registrar of Pension Funds on 11 April 2016.

The revised Rules also address the following:• the weakness in the Rules with regard to governance of the Fund in order to extend the Board’s

powers in the case of delinquent participating Employers and other matters which may affect the financial situation of the Fund to the detriment of the members.

• to accommodate certain requirements and limitations introduced by the Insurer in its policy of insurance with regard to the determination of Risk Salary to protect the Fund and Members against any adverse effects in this regard.

• make provision for the types of Paid-up members and their benefits.

• updating the Rules with regard to costs and amounts that may be debited and credited to the Fund’s account.

The following amendments to the Rules of the Sanlam Preservation Plus Pension Fund and the Sanlam Preservation Plus Provident Fund were made during the review period and registered by Registrar of Pension Funds.

Amendment 2 was registered on 19 May 2016 and provides for:• the requirements of the Financial Services Board where a condition for valuation exemption

requires that a Contingency reserve Account may never have a negative balance at any time.

48

STATUTORY ALTERNATIVES FUND STATUS

Registered name Sanlam Umbrella Pension FundSanlam Umbrella Provident Fund

Registered as an Umbrella Pension Fund and Umbrella Provident Fund (identical benefit and management structures)

Umbrella Sponsor Sanlam Life Insurance Ltd

Pension Fund: Provident Fund:

Registration date 19/09/2001 19/09/2001

Approval date 06/02/2002 06/02/2002

Registration number 12/8/36828 12/8/36813

Approval number 18/20/4/41146 18/20/4/41147

Funding model Defined Contribution Funds

The Fund’s financial reporting period

From 1 January to 31 December

Fund exemptions Valuation exempt, not audit exempt from 1 January 2008 up to 31 December 2017.

The Fund’s registered postal address

PO Box 1, Sanlamhof, 7532

The Fund’s registered physical address

2 Strand Road, Bellville, Cape Town

Separate bank accounts are being maintained for each fund

Pension Fund:ABSA, Centurion Acc no: 4067972456

Provident Fund:ABSA, Centurion Acc no: 4067972383

General Fund informationRegulatory Information for Sanlam Umbrella Pension Fund and Sanlam Umbrella Provident Fund

Annexure

G

49


Registered name Sanlam Futura Umbrella Retirement Fund

Registered as an Umbrella Provident Fund


Registration date 27/07/2010

Approval date 02/08/2010

Registration number 12/8/36634

Approval number 18/20/4/41148



1 June to 31 May

Fund exemptions Valuation exempt, not audit exempt. Received valuation exemption until 31 May 2019.





Bank account detail ABSA, SanbelAcc no: 4074118518

Regulatory Information for Sanlam Futura Umbrella Retirement Fund

50


Registered name Sanlam Plus Pension Preservation FundSanlam Plus Provident Preservation Fund

Registered as an Pension Preservation Fund and a Provident Preservation Fund(identical benefit and management structures)


Pension Fund: Provident Fund:

Registration date 15/01/2012 28/01/2012

Approval date 22/02/2012 21/02/2012

Registration number 12/8/30343 12/8/30342

Approval number 18/20/4/35399 18/20/4/35399



1 January to 31 December

Fund exemptions Valuation exempt, not audit exempt. Received permanent/full valuation exemption until 31 December 2019.





Separate bank accounts are being maintained for each fund

Pension Fund:ABSA, SanbelAcc no: 4075042057

Provident Fund:ABSA, Sanbel Acc no: 4075042031

Regulatory Information for Sanlam Plus Pension Preservation Fund and Sanlam Plus Provident Preservation Fund

51

PRINCIPAL OFFICER RESPONSIBLE PERSON

Full name Kobus Hanekom Erina le Grange

Company Simeka Consultants & Actuaries Sanlam Umbrella Solutions

Postal address PO Box 350, Sanlamhof, 7532 PO Box 1, Sanlamhof, 7532

Physical address Simeka House, Farm 2,Vineyards Office Estate, 99 Jip de Jager, Bellville, 7535


Telephone number

(021) 912-3311 (021) 947-6504

Email address [email protected] [email protected]

Fund Officers for Sanlam Umbrella Pension Fund / Sanlam Umbrella Provident Fund / Sanlam Futura Umbrella Retirement Fund / Sanlam Plus Pension Preservation Fund / Sanlam Plus Provident Preservation Fund

Professional service providers

INDEPENDENT EXTERNAL AUDITOR

Sanlam Umbrella Pension and Provident Funds

Sanlam Futura Umbrella Retirement Fund / Sanlam Plus Pension and Provident Preservation Funds

Company RSM Betty & Dickson Price Waterhouse Coopers

Postal address PO Box 1734, Randburg, 2194 PO Box 2799, Cape Town, 8000

Physical address Cross Street & Charmaine Avenue, President Ridge, Randburg, 2194

No 1 Waterhouse Place, Century City, 7441

Telephone number

(011) 329-6000 (021) 529-2000

52

ADMINISTRATOR SPONSOR

Company Sanlam Life Insurance Ltd (Business unit: Sanlam Umbrella Solutions)

Sanlam Life Insurance Ltd (Business unit: Sanlam Umbrella Solutions)


Physical address 2 Strand Road, Bellville, South Africa

2 Strand Road, Bellville, South Africa

Telephone number

(021) 947-9111 (021) 947-1125

Reg number S13B / FAIS

24/85

Appointments for Sanlam Umbrella Pension Fund / Sanlam Umbrella Provident Fund / Sanlam Futura Umbrella Retirement Fund / Sanlam Plus Pension Preservation Fund / Sanlam Plus Provident Preservation Fund

DEPUTY PRINCIPAL OFFICER CONSULTANT: GOVERNANCE & COMPLIANCE

Responsible person

Erina le Grange Kobus Hanekom

Company Sanlam Umbrella Solutions Simeka Consultants & Actuaries


Physical address 2 Strand Road, Bellville, South Africa

Simeka House, Farm 2, Vineyards Office Estate, 99 Jip de Jager, Bellville, 7535

Telephone number

(021) 947-6504 (021) 912-3311

Email address [email protected] [email protected]

Reg number S13B / FAIS

N/A Simeka FAIS Licence No. 13900

53

SPECIALIST INVESTMENT CONSULTING

SANLAM UMBRELLA PENSION AND PROVIDENT FUNDS / SANLAM FUTURA UMBRELLA RETIREMENT FUND / SANLAM PLUS PENSION AND PROVIDENT PRESERVATION FUNDS

Responsible person

Willem Le Roux Victor Faria Willem Le Roux

Company Simeka Consultants & Actuaries

Independent Actuarial Consultants

Simeka Consultants & Actuaries

Postal address


PO Box 1172, Cape Town, 8000


Physical address


6th Floor, Wale Street Chambers, 38 Wale Street, Cape Town


Telephone number

(021) 912-3324 (021) 422 4373 (021) 912-3324

Email address [email protected] [email protected] [email protected]

Reg number FAIS

Simeka FAIS Licence No. 13900

IAC FAIS Licence No. FSP: 6832

Simeka FAIS Licence No. 13900

Appointments for Sanlam Umbrella Pension Fund / Sanlam Umbrella Provident Fund / Sanlam Futura Umbrella Retirement Fund / Sanlam Plus Pension Preservation Fund / Sanlam Plus Provident Preservation Fund (continued)

RISK INSURER

SANLAM UMBRELLA PENSION AND PROVIDENT FUNDS

SANLAM FUTURA UMBRELLA RETIREMENT FUND

Company Sanlam Life Insurance Ltd Capital Alliance Life Ltd Sanlam Life Insurance Ltd

Postal address


PO Box 10499, Johannesburg, 2000


Physical address

2 Strand Road, Bellville, 7530

3rd Floor, Libridge Building, 25 Ameshoff Street, Braamfontein, Johannesburg, 2017

2 Strand Road, Bellville, 7530

Telephone number

(021) 947-9111 (021) 526-1395 (021) 947-9111

FSB approval number

24/185 17404 24/185

Type of risk Group Life, Disability, Funeral, Accident, Spouses and Trauma Assurance

Group Life, Disability, Funeral, Spouses and Trauma Assurance

Group Life, Disability, Funeral and Accident

54

Board of Trustees for Sanlam Umbrella Pension Fund / Sanlam Umbrella Provident Fund / Sanlam Futura Umbrella Retirement Fund / Sanlam Plus Pension Preservation Fund / Sanlam Plus Provident Preservation Fund

Trustee Member

Derek Smorenburg

Marius Jönas

Jolly Mokorosi

Themba Gamedze

Ian Mcdonald

Joelene Moodley

Alex Paterson

Date appointed

1 July 2007 / 1 August 2009 / 1 January 2013 / 1 January 2016

1 August 2009 / 1 January 2013 / 1 January 2016

1 January 2016 (Independent)

1 March 2016

1 July 2014

Resigned 28 February 2016

1 July 2007 / 1 August 2009 / 1 January 2013 / 1 January 2016

1 January 2016 1 August 2009 / 1 January 2013 / I January 2016

End of term 31 December 2016

31 December 2018

31 December 2018

31 December 2018

31 December 2018

31 December 2018

Compliance with Trustee Training Protocol

Fully compliant

Fully compliant

Fully compliant

Fully compliant

Fully compliant

Fully compliant

Fully compliant

Compliant with Governance Procedures (PF130)

Fully compliant

Fully compliant

Fully compliant

N/A Fully compliant

Fully compliant

Fully compliant

Sponsor appointed

Yes Yes Yes Yes

Member elected

Yes Yes Yes

Status relative to the Sponsor

Non-Executive Entrepreneur with extensive experience in the adminis-tration of an umbrella fund.

Non-Executive Entrepreneur with extensive experience in the adminis-tration of an umbrella fund.

Independent /with extensive experience in consulting on employee benefits.

Executive/ employed by Sanlam

Independent Independent Independent

Trustee Fee Contracted and remunerated by the Sponsor

Contracted by the Sponsor. Agreed trustee fee

Agreed trustee fee

Executive/ employed by Sanlam

Agreed trustee fee

Agreed trustee fee

Agreed trustee fee

Performance Assessment: 5 October 2015

Exceeds job requirements

Exceeds job requirements

n/a n/a Exceeds job requirements

n/a Exceeds job requirements

Attendance at Trustee meeting: 13 Oct 2015

Yes Yes n/a No Yes n/a Yes

17 February 2016

Yes Yes Yes No Yes Yes Yes

22 June 2016 Yes Yes Yes n/a Yes Yes Yes

Attendance of 2015 AGM

Yes Yes n/a No Yes n/a Yes

Agreed Trustee Fee: The standard trustee fee payable in respect of the meetings of the 5 related funds (8:30 to 17:00) is R24 258 plus VAT (Sanlam Umbrella Fund R15 080, Sanlam Futura Umbrella Fund R5 485, Sanlam Plus Preservation Fund R3 693). The fee consists of an attendance fee of 50% and a preparation fee of 50% of the agreed fee. Fees for the attendance of the AGM are R9 367 plus VAT and travel costs. Sub-committees’ participation and additional research is remunerated at an hourly fee of R1 369. This is a very small percentage of the fees paid to independent trustees.

55

Annual Assessment of the Board, Sub-committees and service providers

ENTITY ASSESSED RATING

1 The Board of Trustees Exceeds job requirements

2 Chairmen Exceed job requirements

3 Principal Officer Exceeds job requirements

4 Fund Secretary Exceeds job requirements

5 Administration Sub-committee Exceeds job requirements

6 Death Benefits Sub-committee Exceeds job requirements

7 Audit Sub-committee Exceeds job requirements

8 Investments Sub-committee Exceeds job requirements

9 Complaints Sub-committee Exceeds job requirements

10 Member Communication Sub–committee Exceeds job requirements

11 Risk and Governance Sub-committee Exceeds job requirements

12 Investment consultant Exceeds job requirements

13 Administrator Meets job requirements

14 Benefit Consultant Exceeds job requirements

15 External auditor Exceeds job requirements

2 Strand Road, Bellville, Cape Town | PO Box 1, Sanlamhof 7532, South Africa T +27 (0)21 947 9111F +27 (0)21 947 8066

www.sanlam.co.za

Sanlam Life Insurance Limited Reg no 1998/021121/06. Licensed Financial Services and Registered Credit Provider (NCRCP43).

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