20
Investment Review Annual General Meeting
Investment Review
Annual General Meeting
Agenda
1. Chairman’s report 2. Trustee elections and the new UCTRF Board of Trustees 3. Rules update4. Questions to trustees
Chairman’s report
UCTRF in the wider universe of commercial umbrella funds – Sanlam Benchmark 2019
UCTRF: R6 billion AUM & 6000 members
Why invest in UCTRF?
Ms. Tariro Gura – BBusSci in Finance
• Lower costs than what individuals would pay.
• Higher returns than what is available to individuals.
• Tax advantage when you save into the fund. For every R100 saved you will only pay R55 to R82.
• Your fund credit is protected against creditors.
• Sophisticated mechanisms to keep your savings safe.
Why invest in UCTRF?
MembersThe reason why the fund exists. Members hold the fund accountable. Members monitor the activities of the fund. Disclosure of activities is via website, emails, newsletters and report back meetings.
TrusteesMake the decisions of the fund. Not in direct control of operations. Trustees elected by members and nominated by UCT. Trustees monitor each other and have a duty to report errant/illegal activities. Principal Officer and Deputy Principal Officer have a duty to report errant/illegal activities. All instructions to transact on fund’s behalf signed by Chair and another trustee (usually the chair of the committee involved).
Administrator/regulatorFinancial Services Conduct Authority (FSCA) signs off on the rules of the fund and monitors compliance. Sanlam controls the assets of UCTRF and does not allow any transactions that go against the rules of the fund or the Penson Funds Act.
UCTRF rulesFurther limits the activities of the UCTRF. Cannot authorize anything not allowed by the Pension Funds Act.
Pension Funds ActFoundation of the fund. Nothing can be done that is not allowed by the Act. Limits the activities of the UCTRF.
Pension Funds’ Act
UCTRF rules
Administrator
Trustees
Members
Governance of the UCTRF
Moneyweb - 5 September 2019
Returns to 30 June 2019
Target 1 Year 3 Years 5 Years 7 Years 10 Years
Portfolio A Inflation + 1% over 1 year 8.7% 8.7% 8.2% 7.7% 7.6%
Portfolio B Inflation + 3% over 5 years 3.2% 5.4% 8.9% 11.3% 9.6% Net of fees
Portfolio C Inflation + 5% over 7 years 1.0% 4.7% 6.6% 10.7% 11.3%
Portfolio D Inflation + 4% over 5 years 5.2% 3.8% 4.9% 8.5% 7.9%
Comparisons
SA cash 7.3% 7.4% 7.1% 6.6% 6.6%
SA equity 4.4% 6.9% 5.8% 11.4% 13.5% Gross of fees
Median manager 4.5% 6.0% 6.6% 10.8% 12.2%
Costs to 30 June 2019
Current 2019 2018 2017 2016 Current 2019 2018 2017 2016
Portfolio A Portfolio C
Management fees 0.23% 0.23% 0.25% 0.25% 0.25% Management fees 0.47% 0.51% 0.54% 0.76% 0.78%
Administration fees 0.06% 0.06% 0.06% 0.06% Administration fees 0.06% 0.06% 0.06% 0.06%
Other UCTRF costs 0.11% 0.11% 0.11% 0.10% Other UCTRF costs 0.11% 0.11% 0.11% 0.10%
Total 0.40% 0.42% 0.42% 0.41% Total 0.68% 0.71% 0.93% 0.94%
Portfolio B Portfolio D
Management fees 1.16% 1.27% 1.34% 1.33% 1.66% Management fees 0.85% 0.95% 0.73% 0.66% 0.71%
Administration fees 0.06% 0.06% 0.06% 0.06% Administration fees 0.06% 0.06% 0.06% 0.06%
Other UCTRF costs 0.11% 0.11% 0.11% 0.10% Other UCTRF costs 0.11% 0.11% 0.11% 0.10%
Total 1.44% 1.51% 1.50% 1.82% Total 1.12% 0.90% 0.83% 0.87%
• Significant investment into Futuregrowth’s Infrastructure & Development Bond Fund as second South African bond manager:
“The Composite aims to provide investors with a vehicle that facilitates infrastructural, social, environmental and economic development in southern Africa and delivers on a variety of social impact requirements such as job creation, affordable housing, access to services and healthcare.”
• Significant investment into Mazi Capital as fourth South African equity manager
The highest rated South African black-owned asset manager.
• Funeral cover offered as benefit to members
Environmental, social and governance (ESG) highlights
• Agreed to disclose carbon investments at the AGM of 2017: For 2019 see https://www.uctrf.co.za/systems/uctrf/useruploads/2019%20Investment%20Approach%20ESG%20designed%20doc.pdf
• Instructed all asset managers to integrate ESG into investment process.
• Monitor implementation. Example questions posed to ABAX in 2019:
UCTRF approach to carbon investments
UCTRF approach to carbon investments
The Principles for ResponsibleInvestment were developed by aninternational group of institutionalinvestors reflecting the increasingrelevance of environmental, socialand corporate governance issuesto investment practices. Theprocess was convened by theUnited Nations Secretary-General.
The Board of Trustees of the University of Cape Town Retirement Fund consists of 14 Trustees. Seven are nominatedand elected by members, deferred pensioners and pensioners of the Fund. The other seven are appointed by theemployer.
Member and Employer Trustees also have Alternate Trustees in case one of them is unable to attend a Trustee meetingor resigns. The Employer appoints one Alternate Trustee and one or more Alternate Member Trustee/s are appointedfrom those who receive the next highest number of votes during member Trustee elections.
Trustee elections were held during in October of 2019. The current Board of Trustees will hold office until 31 December2019.
Trustee Elections and the New UCTRF Board of Trustees 2019
The new Board consists of the following Trustees:
Assoc Prof Phillip De Jager Mrs Margie TaintonMs Karin LehmannMr Hardy MaritzMr Xolisa DhlaminiAssoc Prof Gizelle WillowsAssoc Prof Shaun ParsonsMr Paul Gaika(Alternate)
Mr Glenn Hurlow Ms Judith Du ToitMrs Xolelwa KakazaMrs Yolokazi QuweMs Ropfiwa SithubiMr Thando TsotsobeDr Reno MorarMrs Blanche Claasen-Hoskins(Alternate)
Employer Nominated Trustees Member Elected Trustees
The new Board will hold office for a period of four years.
Rules Update
The following amendments (3 to 5) have been registered in the last financial year:
• Funeral Cover was added as an ancillary risk benefit for members on an opt-out basis. The Rules were amended to allow for the premiums for this benefit to be deducted from the employer contribution to the UCTRF and for the premiums to be paid through the UCTRF.
• Premiums for the separate death cover are now paid through the UCTRF. (Previously these were paid by the employer directly to the insurer.)
• The UCTRF has to send written communication to members either via email or to their postal address and not to both as was previously reflected.
• The Rules were amended to clarify the fact that it is the budgeted cost, and not the actual administration and operating costs of the UCTRF, which are allocated to the General Reserve Account.
• The contribution rates for existing disability claimants were clarified.• The Deemed Pensionable Amount for members in receipt of a partial disability benefit must be reduced by the same
percentage that the Member’s income disability benefit has been reduced and, if such Member receives and additional salary from the Employer, his/her Deemed Pensionable Salary for this purpose should include the portion of such additional salary deemed to be pensionable.
Rules Update
• A Member who has already reached the Normal Retirement Age may now transfer his/her benefits to a retirement annuity fund, where no such transfer was previously possible, in line with changes to legislation.
• The process to be followed if the UCTRF Board becomes deadlocked on a specific matter was clarified.• The decision by UCT to permit another Employer to participate in the UCTRF must be approved by the UCTRF Board
before such participation may commence.• The requirement for a secret ballot at trustee elections was removed in order to enable the UCTRF to check for
duplicate votes. Each Member will have one vote which he/she may cast in a manner deemed appropriate by the UCTRF.
• It was previously compulsory for the Members to elect an alternate to act on behalf of the Elected Board Members. The UCTRF Rules are amended to remove this requirement.
• All other changes were in line with changes in the legislation.
Rules Update Cont.
Upcoming amendments
Amendment 6 was registered by the FSCA on 3 October 2019.• A Member who has retired from Service may transfer his/her benefit to a retirement annuity fund as well as a
preservation fund of his/her choice, and the limitation of such transfer having to be made only after the Member has reached Normal Retirement Age was remove as was the option to transfer only a portion. This is in accordance with current opinion in this regard in the industry.
• A Member is entitled to make his/her benefit paid-up in the UCTRF irrespective of whether he/she is liable for a section 37D deduction from his/her benefit at termination of, or retirement from, Service.
• The term of office of Board Members was increased from three to four years.• The amount to be paid by the Employer in the event of the temporary absence of a Member with reduced or no
remuneration was increased to 4% of Deemed Pensionable Amount in order to ensure that it is sufficient to cover risk and administration costs.
• The costs of financial advice obtained by a Living Annuitant may be debited to his/her Living Annuity Balance Account, and the Board may identify suitable accredited financial advisors for this purpose.
Rules Update Cont.
Questions?
