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| 1 PRODUCT INFORMATION BROCHURE
| Date post: | 19-Mar-2016 |
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PRODUCT INFORMATION BROCHURE
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OUR VISIONTo continuously improve our service excellence as Southern Africa’s leading
independent service provider of beneficiary funds and umbrella trusts.
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FAIRHEADS GROUP PROFILE
Fairheads is a niche administration, trust and wealth management group. From its origins over 85 years ago, it has grown into a contemporary, professional organisation offering services of the highest international standards. Fairheads is a long-standing member of The Fiduciary Institute of South Africa. We believe our differentiators are a highly personalised service based on genuine trusteeship, excellent administration and a conservative tailored approach to investment management.
FAIRHEADS BENEFIT SERVICES (PTY) LTD
Fairheads Benefit Services (Pty) Ltd is Southern Africa’s leading independent service provider of beneficiary funds and umbrella trusts for retirement funds and testamentary trusts. We administer approved death benefits for retirement funds; we also administer other employee and life-cover benefits for employer companies (unapproved benefits). Our head office is in Cape Town and we have walk-in service offices in Durban, Johannesburg and Sandton. Fairheads is a section 13B licensed administrator and an authorised service provider in terms of FAIS legislation. Fairheads applies its leading edge technology and expertise to beneficiary funds and umbrella trusts. As a South African company, we are committed to corporate transformation and over the decades we have always had a strong focus on empowering and developing our people. We currently have a Level 3 BEE scorecard.
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WHEN TO USE A BENEFICIARY FUND OR AN UMBRELLA TRUSTOn the death of a member of a retirement fund or an employee, benefits become payable to dependants or nominees. These benefits can be so-called approved benefits such as death benefits, or unapproved benefits, such as group life-cover benefits or other employee benefits. Section 37C of the Pension Funds Act sets out a number of options for trustees to deal with approved death benefits payments. Where it is not suitable to pay the benefits directly to the dependant, nominee or guardian/caregiver, the benefits may be paid to a beneficiary fund or an umbrella trust, subject to certain criteria. These options are normally considered in the case of minor dependants/nominees or persons with a legal disability.
• Onlysection37Cdeathbenefits(approvedbenefits)payable by a registered fund for the benefit of a dependant or nominee may be paid to a beneficiary fund. This can be for a minor or major if considered appropriate by the retirement fund trustees. Approved benefits include transfers from other registered beneficiary funds and trusts.
• Theregulator’smainpurposeincreatinganewlegalvehicle, the beneficiary fund, was to offer greater protection to dependants with lump sum benefits under the Pension Funds Act.
• Benefitpaymentsfromunapprovedfundsmaybepaidintoan umbrella trust; e.g. group life, motor vehicle accident and road accident fund claims and other policies.
• Inadditiontothis,deathbenefitspayableintermsof section 37C (approved benefits) may be paid into a trust,
provided a) a trust is nominated by the member, or b) at the request of a major dependant or nominee, or c) at the request of a person recognised in law as the
person responsible for managing the affairs or meeting the daily care needs of a dependant or nominee.
THE FAIRFUND UMBRELLA BENEFICIARY FUNDREGISTRATION NO. 12/8/37890/1
THE FAIRFUND TRUSTMASTERS REFERENCE T1012/91
PRODUCT FEATURES
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• Established01January2009.• RegisteredwiththeFinancialServicesBoard• Regulatoryenvironment - Pension Funds Act - Financial Services Board - Financial Institutions (Protection of Funds) Act• Annualauditisperformedonthefund.• Boardhasindependenttrusteerepresentation.• FundmustreporttotheFSBannuallyonfinancial
statements.• FundrulesareregisteredandapprovedbytheFSB.• 13Badministrationlicencerequired.• FundisFICAexempt.• Fundhasadministrationagreementwithadministrator
setting out duties and service standards.
• Established1991.• RegisteredwiththeMasteroftheHighCourtandthe
SouthAfricanRevenueService.• Regulatoryenvironment - Trust Property Control Act -MasteroftheHighCourt - FAIS Act• Annualauditisperformedonthefund(notastatutory
requirement).• Boardhasindependenttrusteerepresentation.• Norequirementtosubmitannualfinancialstatementsto
MasteroftheHighCourt.• TrustdeedregisteredwithMasteroftheHighCourt.• TrustisFICAcompliant.• Fundhasadministrationagreementwithadministrator
setting out duties and service standards.
THE FAIRFUND UMBRELLA BENEFICIARY FUND THE FAIRFUND TRUST
LEGAL AND GOVERNANCE
The company has a complaint resolution policy, which complies with FAIS legislation and pension fund legislation. A summary is available on www.fairheads.com.
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THE FAIRFUND UMBRELLA BENEFICIARY FUND THE FAIRFUND TRUST
ADMINISTRATION
SET UP
• Memberaccountsetup
• Oncompletionandsubmissionofanapplicationform, together with payment and required supporting documentation, a member account is established.
• Beneficiarysub-accountsetup
• Oncompletionandsubmissionofadeedofsettlement,together with payment and required supporting documentation, a sub-account is established.
REGULAR PAYMENTSRegular(monthly/quarterly/annual)paymentsaremadetomembers/beneficiariesortheirguardians/caregiversasafixedamount
determined in the application form/deed of settlement or a discretionary amount determined by the administrator.
FINANCIAL ASSISTANCE PAYMENTSAd hoc payments are requested by members/beneficiaries or their guardians/caregivers to pay for specific once-off or annual requests
e.g. school fees and related costs, medical or other special requests.
TERMINATIONSMember/beneficiaryaccounts/sub-accountsaregenerallyterminatedonattainingageofmajority(18)unlessthemember/
beneficiary has a legal disability or the member/beneficiary consents to the ongoing management of the account.
REPORTINGTo members / beneficiaries• Memberguide• Annualmember/beneficiaryfinancialstatements• Annualtaxinformation(whereapplicable)• Annualcertificatesofexistence• Investmentreports
To consultants and retirement fund trustees (on request)• Membershipregistersandstatistics• Financialstatements• Quarterlyinvestmentreports
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Transfer from a retirement fund• Lumpsumpaymentsfromapprovedfundsareaftertax
benefits.• Thefundisexemptfromtax.• Anypaymenttoamemberistaxexempt.
• Lumpsumpaymentsintotrustareaftertaxbenefits.• Thetrustisavestingtrustandthereforehasnotaxliability.• Allinterestincomeandcapitalgainsvestinthe
beneficiaries and are subject to individual tax rates.• Themajorityofbeneficiaries’incomeisbelowthetax
threshold and therefore they have no tax liability unless they have other taxable income.
THE FAIRFUND UMBRELLA BENEFICIARY FUND THE FAIRFUND TRUST
TAXATION
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THE FAIRFUND UMBRELLA BENEFICIARY FUND THE FAIRFUND TRUST
MANAGEMENT FEES (excl VAT)
CAPITAL INTRODUCTION FEE
ANNUAL ADMINISTRATION FEE
1.0%(minimumR232.59) 1.0%(minimumR232.59)
TRANSACTION FEE
REPORTING FEE
TRANSFER FEE
Randdenominatedthresholds(minimumfeesandreportingfees)willbeadjustedatthebeginningofeachfinancialyear for inflation (CPI).
2%ofeachamountpaid(excludingregularpayments) 2%ofeachamountpaid(excludingregularpayments)
R11.63permemberpermonth R11.63perbeneficiarypermonth
In the event of the entire fund being transferred to another administratororfund,anamountequalto1%ofthemarketvalue of assets under administration is payable in the month of transfer of the assets. In the event that a member account or a group of member accounts is/are transferred to another approved beneficiary fund subject to the approval of the trustees, the full transaction fee shall apply.
In the event of the entire fund being transferred to another administrator,fundortrust,anamountequalto1%ofthemarket value of assets under administration is payable in the month of transfer of the assets. In the event that a beneficiary sub-account or a group of beneficiary sub-accounts is/are transferred to another approved trust subject to the approval of the trustees, the full transaction fee shall apply.
1.8%perannum(annualminimumofR348.89permember) 1.8%perannum(annualminimumofR348.89perbeneficiary)
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THE FAIRFUND UMBRELLA BENEFICIARY FUND THE FAIRFUND TRUST
OTHER FUND COSTS
BANK CHARGESCharges are allocated monthly to each member account on a daily weighted average basis on the current account balance.
INVESTMENT FEESInvestment fees are deducted from the underlying portfolios under separate mandates from the respective investment managers.
AUDIT FEES, FIDELITY COVERThese fees are charged to each member account on a pro rata market value basis.
STATUTORY LEVIES AND TAXESWhere applicable, these will be paid to the relevant authorities and charged to the appropriate member account.
INDEPENDENT TRUSTEE, ASSET CONSULTANT, LEGAL CONSULTING, COMMUNICATION, INVESTMENT TRANSITION FEE AND ANY OTHER FUND RELATED COSTS
Where applicable, these fees and other related costs in respect of professional services rendered are charged to each member/beneficiary account as and when incurred either on a pro-rata market value basis or per member, depending on the nature of the
cost as approved by the Board of Trustees.
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Investment managers are appointed by the trustees. The investment manager’s performance is monitored and reported on a quarterly basis. The investment vehicles used include registered collective investment schemes that are transparent on fees and performance.
RiscuraSolutions(Pty)Ltdaretheappointedassetconsultanttobothproducts.
Due to the fiduciary nature of our beneficiary services, the investments are managed on a conservative basis. The primary objectives are:•Provisionofliquidityforregularandfinancialassistancepayments•Preservationofcapitalwithalowriskprofile.
Three investment vehicles are used in combination depending on individual member needs and based on the investment horizon and regular payment requirements. The choice of the investment manager for any investment product remains with the trustees.
INVESTMENTS
Call depositsA percentage of funds are held on call deposits, spread amongst South Africa’s leading banks (A1 + rating or higher) to provide immediate liquidity. Interest is paid monthly.STANLIB:StandardBankInstitutionalMoneyMarketFund Fee:0.125%p.a.(excludingVAT)
Income fundThe objective is to maximise income on a monthly basis by achieving returns in excess of the money market and interbank call rate while maintaining a high degree of liquidity and capital preservation. This objective is met using a registered collective investment scheme.PRESCIENT INVESTMENT MANAGEMENT: PrescientIncomeProviderFund Fee:0.25%p.a.(excludingVAT)
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INVESTMENTS (Continued)
Balanced fundWhere accounts have capital in excess of that necessary to generate income, a portion of the fund is invested for capital appreciation. This objective is met using a registered collective investment scheme. The fund has a prudential mandate to achieve long term capital growth within an environment of moderate risk.ALLAN GRAY:AllanGrayBalancedFund (Performancefee)min0.5%/max1.5%p.a.(excludingVAT)
Current accountThefundhasitsownaccountwithFirstNationalBank.Allreceiptsandpaymentsareprocessedthroughthisaccount.The adminitrator has negotiated competitive interest rates and bank charges.
There is an investment policy statement in place which includes an asset allocation model and an annual reblend model. This is reviewed regularly by the trustees, in consultation with the appointed asset consultant.
CERTIFICATION
Intermediaries or brokers wishing to be certified to market beneficiary services are invited to contactGiselleGould,BusinessDevelopmentDirector,on(011)[email protected].
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Fairheads Benefit Services (Pty) Ltd is an authorised financial services provider | FSP 18428
Fairheadscallcentre0860102919(sharecall)
www.fairheads.com
SANDTONTel +27 11 883 9755 | Fax +27 11 883 4791
E-mail [email protected]
JOHANNESBURGTel +27 10 100 3318/16 | Fax +27 86 5464 511/054
E-mail [email protected]
DURBANTel +27 31 368 9260 | Fax +27 31 368 9270
E-mail [email protected]
CAPE TOWNTel +27 21 410 7500 | Fax +27 21 410 7994
E-mail [email protected]
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