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GROUP RETIREMENT SAVINGS MEMBER INFORMATION BOOKLET
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GROUP RETIREMENT SAVINGS
MEMBER INFORMATION BOOKLET
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C O N T E N T S
This booklet is designed to explain, in detail, how your retirement fund works.
It is important to read this booklet, so that you and your family know about the
benefits in your fund. It is important to keep this booklet in a safe place so that you
or your family can look up specific details about your fund benefits as and when you
may need to do so.
This booklet will explain how your fund works, how your fund is managed, what you
may receive when you retire, what happens when you leave employment, what your
family will get should you pass away, and who to contact if you need any help.
Disclaimer
This booklet is a summary of features of the product and is for general information
purposes only and is not intended to represent the detailed advice described in
the Financial Advisory and Intermediary Services Act, 37 of 2002. Fedgroup, the
fund, the trustees and its agents cannot be held responsible for any damage or loss
suffered as a result of any action you take based on the information in this booklet or
any discussions relating to it.
Fedgroup Employee Benefits (Pty) Ltd is a licenced 13B Administrator FSCA License no. 24/493
Welcome to the Fedgroup Family
1. Important Terms............................................................................ 1
2. About the Fund and its Governance Structures............. 3
3. Fund Membership....................................................................... 5
4. Contributions to the Fund....................................................... 6
5. Your share of fund...................................................................... 7
6. When Can You Retire?.............................................................. 8
7. Benefit on Withdrawal............................................................... 8
8. Benefit on Retirement............................................................... 10
9. Benefit on Death......................................................................... 12
10. What are the Default Regulations?.................................... 13
11. Fees and Charges Explained................................................. 18
12. Complaints Process ................................................................ 20
13. Contact Us.................................................................................. 22
14. Summary of Risk Benefits..................................................... 23
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IMPORTANT TERMS
ADMINISTRATOR shall mean Fedgroup Employee Benefits
(Pty) Ltd appointed by the trustees to maintain the records and
carry out the administrative functions of the fund.
DEPENDANTS shall mean for each member:
a. A person in respect of whom the member is legally liable for
maintenance.
b. A person in respect of whom the member is not legally liable
for maintenance, if such person.
1. Was, in the opinion of the trustees, upon the death of the
member in fact dependent on the member for maintenance.
2. Is a permanent life partner or spouse or civil union partner of
a member in accordance with the Marriage Act No. 68 of
1961, the Recognition of Customary Marriages Act No. 68
of 1997, the Civil Union Act No. 17 of 2006, Islamic law or the
tenets of any other religion.
3. Is a child of the member, including a posthumous child, a
foster child, an adopted child, a child born out of wedlock or
a child for whom the member has assumed responsibility.
4. Is a person in respect of whom the member would have
become legally liable for maintenance, had the member not died.
DEFERRED RETIREE shall mean a member who has retired
from service, but who has not yet elected to retire from the
fund.
FUND shall mean the Distinction Umbrella Pension Fund and
Distinction Umbrella Provident Fund, the underlying funds of
the Fedgroup Group Retirement Savings.
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“ “Provided that the terms of this definition shall be subject to the provisions of the Pension Funds Act No. 24 of 1956, as amended.
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MEMBER shall mean a person who has been admitted to
membership of the fund in accordance with the rules and who
has not yet received all the benefits due to him in terms of the
rules and will, unless otherwise indicated by the context, include
a deferred retiree and a paid-up member.
PAID-UP MEMBER shall mean a member who leaves service on
or after 1 March 2019 for reasons other than retirement or death.
PENSIONABLE SALARY shall mean for each member that
part of his annual remuneration package which, as agreed
between the member and the participating employer, is to be
taken into account for the purposes of calculating benefits and
contributions under the fund.
RETIREMENT AGE shall mean in respect of a member, other
than a paid-up member, the age at which that member is
eligible to retire in terms of the special rules applicable to such
member, provided that, where a member who is eligible to
retire in terms of the special rules, such member may notify the
trustees, in writing, of his intention to remain a member until
he elects to retire from the fund, whereupon he shall provide
the trustees with instructions regarding the payment of his
retirement benefit.
RETIREMENT DATE shall mean the date on which a member
or paid-up member elects to retire from the fund and becomes
entitled to an annuity and/or a lump-sum benefit.
RISK BENEFITS shall mean any life assurance, disability, illness
benefits or funeral cover that may apply to your fund. This is
insurance and only pays out in the event you pass away, or you
are unable to work anymore, or you or someone in your family
passes away (for the funeral cover only, if applicable).
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SHARE OF FUND shall mean the total amount of assets held in
a member’s name, calculated in terms of the rules of the fund.
SPECIAL RULES shall mean the separate schedule of special
rules, read in conjunction with the general rules of the fund, that
govern those provisions specific to each participating employer
and the members in the employment of such participating
employer, provided that if, at any time, any provision in the
special rules contradicts or conflicts with a provision in the
general rules, the provision contained in the general rules shall
apply.
UMBRELLA FUND shall mean a retirement fund in which several
unrelated employers participate, managed by a single board of
trustees
INVESTMENT RETURN shall mean the gain or loss generated on
an investment relative to the amount of money invested.
2.1 Details of the Fund
Contributions to Fedgroup’s Group Retirement Savings are
invested in the two Distinction Umbrella Funds, which are
defined contribution funds registered with the office of the
Financial Sector Conduct Authority (FSCA).
The details of the funds are:
• Distinction Umbrella Pension Fund, FSCA fund registration
number [12/8/37775]
• Distinction Umbrella Provident Fund, FSCA fund registration
number [12/8/37774]
ABOUT THE FUND AND ITS GOVERNANCE STRUCTURES2
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2.2 Management of the Fund
The fund is managed by the Board of Trustees, of which
the primary responsibility is to protect the interests of all
members.
Fund Trustees
Nick Jacobs Chairman and Independent Trustee
Duduza Khosana Independent Trustee
Fiona Klose Sponsor-Appointed Trustee
Michael Field Sponsor-Appointed Trustee
Craig Taylor Principal Officer and Alternate
Independent Trustee
Grant Field Alternate Sponsor-Appointed Trustee
Amore Brits Compliance Officer/Fund Monitoring
2.3 The Rules of the Fund
There is a set of general rules that applies to all members of
the Distinction Umbrella Pension and Provident Funds. The
trustees decide on the general rules of the fund, which are
approved by the FSCA. These rules state how the fund must
operate, as well as provide a framework for all the activities
of the fund.
The specific benefits that apply to you are set out in the
special rules applicable to your employer. Your employer
decides on the benefits provided in the special rules of
the fund. The special rules set out who can join the fund,
retirement fund contribution rates, insured benefits, normal
retirement age and other issues specific to your employer’s
participation in the fund.
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“ “To view a copy of the fund rules please speak to your Human Resources Department.
FUND MEMBERSHIP3Your membership of the fund is linked to your employment with
your current employer who pays over the contributions on your
behalf.
Your membership begins once the fund has received your
personal information from your employer and your first
contribution is received by the fund.
3.1 As an Active Member of the Fund You May Not
3.1.1 Cancel contributions already made to the fund (i.e. ask for a refund).
3.1.2 Transfer or pledge your benefit in an investment account
to someone else as payment or security for your
obligations to them (this also applies to a security cession
in relation to a loan).
3.1.3 Withdraw from the fund if you are in the employ of the
employer.
Your fund membership will come to an end when your
employment is terminated due to resignation, retrenchment,
dismissal, retirement, disability or should you pass away while
still a member of the fund.
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CONTRIBUTIONS TO THE FUND4
The special rules will tell you if both you and your employer
contribute to the fund, or if your employer contributes on
your behalf to the fund. The special rules also tell you what
percentage of your salary your employer, or you and your
employer, must contribute to the fund every month. This means
an amount of money is paid to the fund on your behalf every
month.
Your employer uses your pensionable salary to calculate your
monthly contributions. Please check this salary with your
employer as, a) it may not be your total remuneration package
and b) it has a direct impact on the amount invested for you
every month as well as the value of your risk benefits (see
Annexure A).
Additional voluntary contributions are extra contributions you
can choose to make on top of the monthly contributions you
and your employer already make to the fund. The purpose is to
help you save more towards your retirement.
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“ “Every member can make additional voluntary contributions.
YOUR SHARE OF FUND5Your share of fund is the amount of money held in the fund for
you. This is invested in the market to ensure you have a strategy
to target growth on your capital. Note that the market does
fluctuate, and so negative investment returns are possible.
5.1 What You Need to Know about Your Share of Fund
5.1.1 Your share of fund is the sum of all contributions made
to the fund by you and/or your employer on your behalf,
less administration fees, cost of applicable risk benefits
and advisor fees (where applicable), plus any investment
performance.
5.1.2 Your share of fund remains invested for the full duration of
your employment and is subject to the investment returns.
5.1.3 Your share of fund may also include additional voluntary
contributions as well as any amounts transferred into the
fund from a past employer’s fund.
5.2 Benefit Statements
Benefit statements are distributed to all members on an annual
basis. Following your employer’s scheme anniversary, you will
receive a copy of your benefit statement, which will provide
a summary of your risk benefits and share of fund to date of
statement.
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WHEN CAN YOU RETIRE?
BENEFIT ON WITHDRAWAL
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Each member’s normal retirement date will be the first day
of the month coincident with or following the member’s
attainment of the scheme’s retirement age, as defined in the
rules of the scheme.
It’s your responsibility to tell your employer timeously what you
want to do with your share of fund when your fund membership
comes to an end. It’s in your best interest to get expert financial
advice about your options on withdrawal, retirement and death.
7.1 What Happens When You Change Jobs
If you resign, are dismissed or retrenched prior to reaching your
normal retirement date, the benefit payable to you will be your
share of fund.
Your Options on Withdrawal
7.1.1 Your share of fund may remain in the fund. In this way
your will preserve your investment, allowing it to continue
to grow.
7.1.2 Your share of fund may be taken as a cash lump sum
(subject to tax).
7.1.3 Your share of fund may be transferred to another
approved fund, provided the transfer is allowed in terms
of legislation and the fund rules.
7.1.4 You may elect a combination of cash amount (subject to
tax) and transfer the balance to another approved fund.
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Where you fail to make a selection on withdrawal you will
automatically become a paid-up member in the fund. Refer
to paragraph (7.2) for further details on what being a paid-up
member in the fund means.
It will take a minimum of 10 business days to finalise payment
of your withdrawal benefit, provided all requirements are met. If
your employer has lodged a claim against you for compensation
due to theft, fraud, misconduct or dishonesty, the fund may
withhold your benefit and deduct the amount to be paid to
your employer. The fund may also withhold your benefit for this
reason upon retirement or death.
“ “The fund will communicate with you in the form of written counselling on termination of employment so that you understand the options that are available on withdrawal.
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My Services helpline 0860 102 480
8.1 What happens when you retire?
Pension Fund
When you retire as a member of a pension fund, pension
preservation fund or retirement annuity fund and you wish to
take a portion of your share of fund as a lump sum, you are
allowed, in terms of the Pension Funds Act, to take a lump sum
equal to a maximum of one-third of your share of fund. The
remaining two-thirds of your benefit must be used to purchase
an annuity.
Where your share of fund value does not exceed R247 500
(or the amount as determined by the South African Revenue
Services from time to time) you may take your full share of fund
as a cash lump sum.
Provident Fund
When you retire and you are a member of a provident fund,
your share of fund is usually paid by way of a lump sum (subject
to tax) unless the rules of such a fund provide for the payment
of an annuity on a member’s retirement.
If you belong to the provident fund, you can use any part or
all of your share of fund to buy a pension from a registered
insurance company when you retire. There’s no limit on how
much cash you can choose to take.
You may be liable for income tax on any lump sum taken,
depending on tax legislation applicable at that time.
Your Options at Retirement
8.1.1 Opt into the board-approved post-retirement annuities
under the fund’s annuity strategy.
BENEFIT ON RETIREMENT8
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8.1.2 Use the full benefit to purchase an annuity of your choice
from a provider of your choice.
8.1.3 Withdraw a maximum of one-third of the benefit as a
lump sum if you are invested in the Distinction Umbrella
Pension Fund. You must use the remaining two-thirds to
purchase an annuity in your name.
8.1.4 Take the full benefit as a lump sum if the pre-tax value of
your Distinction Umbrella Fund pension benefit, on the
date of retirement, is equal to or less than R247 500 (or
the amount determined by legislation or regulatory
authorities from time to time).
8.1.5 Withdraw up to 100% of the benefit as a lump sum if your
retirement savings are invested in the Distinction
Umbrella Provident Fund. You may use this benefit to
purchase an annuity in your name.
It will take a minimum of 10 business days to finalise your retirement and/or transfer, provided that all requirements are met.
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BENEFIT ON DEATH99.1 Taking Care of Your Loved Ones in the Event of Death
9.1.1 If a member passes away before retirement age, the
member’s share of fund will become payable to the
dependents of the deceased member. Where applicable,
Death Cover benefits will also be paid.
9.1.2 The trustees of the fund are, by law, required to perform
a full investigation upon the death of a member to identify
all dependents within 12 months following the date of
receipt of the notice of death. The completion of a
beneficiary nomination form, setting out who the
dependents are and who the member would like to receive
a benefit, assists the trustees in performing the
investigation. It is also essential that this is kept up to date
as your personal circumstances change, such as upon the
birth of a child.
9.1.3 Fedgroup must be notified of a member’s death in writing.
The notification must include the personal details of the
deceased member and a copy of the death certificate, as
well as any other supporting documents that may be
required or requested by the fund or by Fedgroup.
9.1.4 Following receipt of the death notification, the member’s
benefit will remain invested in the fund until the
investigation is complete and the distribution of the benefit
has been approved by the trustees.
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The default regulations that came into effect on 1 March
2019 are designed to improve the outcomes for members of
retirement funds.
What are the default regulations?
There are three relevant regulations in the Pension Funds Act:
• Regulation 37 requires retirement funds to offer a sound
default investment strategy.
• Regulation 38 requires that pension and provident funds offer
a default preservation strategy.
• Regulation 39 requires funds to have an annuity strategy for
members upon their retirement.
10.1 Default Investment Portfolio
A default investment portfolio is an investment portfolio in
which your retirement savings will automatically be invested
unless you make your own investment decision. The Distinction
Umbrella Pension Fund and the Distinction Umbrella Provident
Fund only offer one investment portfolio option, and as such
the Board of Trustees has agreed that this investment portfolio
will be deemed the default investment strategy that has been
selected by your employer to apply to all employees.
The portfolios operate along the same principles as most
balanced portfolios and target long-term growth that
outperforms the consumer price index (CPI) by a reasonable
margin over rolling periods. The portfolios comply with the
requirements of Regulation 28 of the Pension Funds Act.
The portfolios aim to provide members with long-term growth.
Strategically they offer exposure to all asset classes ranging
from property, equities, debt instruments and cash, with a bias
towards equities offering long term value.
WHAT ARE THE DEFAULT REGULATIONS?10
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The trustees are satisfied that the default investment portfolio is
not excessively complex or unreasonably expensive.
10.2 Default Preservation
Before 1 March 2019, when you left the service of your employer
before reaching retirement age, you had an option to either
take your withdrawal benefit in cash, or transfer your withdrawal
benefit to another registered fund.
Effective 1 March 2019 it is now possible for you to leave
your benefit in the fund and become a paid-up member until
such time you elect to withdraw or transfer your benefits
or alternatively retire from the fund. There are a number of
benefits to doing so and an independent financial advisor would
be well positioned to give you advice on your options.
10.2.1 What Happens When You are a Paid-Up Member?
10.2.1.1 No new contributions or deductions for risk benefits will
be allowed.
10.2.1.2 Your benefit will remain in the default investment
portfolio once you become a paid-up member.
10.2.1.3 You will have the right to access your paid-up benefit
at any time (i.e. you may transfer or withdraw your
benefit according to the fund’s rules). If you die before
you access your paid-up benefit, the death claims
process will be the same as outlined under point 6.3 above.
10.2.1.4 You will be presented with a paid-up membership
certificate within two months of the fund becoming
aware that you have left the service of the participating
employer and have not yet exercised any choice in terms
of the payment of your withdrawal benefit.
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10.3 Default Annuity
The default annuity strategy is an opt-in option for retiring
members and represents the fund’s best proposal for the
average member of the fund. This is a soft default, and
members would need to opt in instead of opt out.
Annuities can be sourced from a registered insurer or provided
by the fund.
The options are as follows:
• A living annuity paid from the fund
• A living annuity purchased from an external source in the
name of the annuitant
• A living annuity purchased from an external source in the
name of the fund
• An annuity, other than a living annuity, paid from the fund
• An annuity, other than a living annuity, purchased from a
long-term insurer in the name of the annuitant
• An annuity, other than a living annuity, purchased from a
long-term insurer in the name of the fund
The trustees have considered the annuity options available for
this fund and limited those options to annuities purchased from
an external source in the name of the annuitant.
10.3.1 The Fund’s Default Annuity Strategy
Considering the diversity of the membership in umbrella funds,
the trustees have selected a with-profit annuity purchased and
paid by a long-term insurer in the name of the annuitant.
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The Golden Income With-Profit Annuity offered by insurer,
Momentum Metropolitan Life Limited, has been selected as the
default annuity strategy of the Distinction Umbrella Pension
Fund and the Distinction Umbrella Provident fund.
In selecting this annuity, the trustees have made provision for a
member’s future security in terms of longevity, whilst targeting
an increase basis designed to combat the effect of inflation
through a growth annuity concept.
How Does It Work?
A lump-sum premium is paid to the insurer that secures the
guaranteed income for the life of the pensioner.
The guaranteed income cannot be decreased. However, there is
also no guaranteed increase as the with-profit annuity targets
a percentage of CPI as an increase. The level of initial income
selected will affect the level of future increases.
The post-retirement income (PRI) rate selected will determine
the rate of future increases. The lower the PRI rate selected at
inception of the policy, the lower the initial income, but future
expected increases are higher, and vice versa where a higher
PRI rate is selected at policy inception.
“ “It is stressed that this option may not suit all members and that members should still seek financial advice from a financial advisor to ensure that the annuity is best suited to their retirement objectives.
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10.4 Retirement Benefit Counselling
Members can expect to receive benefit counselling at each of
the following events:
• Upon commencing membership in the fund
• Upon withdrawal
• Upon retirement
“ “The benefit counselling will contain information on risks, costs and charges associated with the default strategies that have been adopted.
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FEES AND CHARGES EXPLAINED11
11.1 Administration Fee
11.1.1 Active Member Administration Fees
The active member administration fee charged by Fedgroup
is calculated as a percentage of your pensionable salary,
as agreed on by your employer. The fund will deduct the
administration fee from your total contribution and pay this
over to the administrator.
11.1.2 Paid-up Member Administration Fees
The administration fee payable by a paid-up member will be
a maximum of 0.75% (excluding VAT). The admin fee will be
calculated on the invested share of fund value and the fund will
deduct the fee from a paid-up member’s investment account on
the last day of the month and pay it to the administrator.
11.2 Investment management Fee
The manager of the underlying investment portfolio charges
annual investment management fees. These fees vary per
investment portfolio. Fees may be fixed or be performance
related. There are also other allowable expenses associated with
investment portfolios. These fees and expenses are deducted
within the investment portfolio and are therefore accounted for
in the investment portfolio’s performance figures. Please refer
to the relevant investment portfolio fact sheets which can be
found on www.fedgroup.co.za.
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11.3 Participating Employer Advisor
Your employer may choose to appoint one or more advisors to
provide advice relating to the fund benefits or investments. If
your employer and the advisor/s agree to a contribution-based
participating employer advisor fee, the fund will deduct the
agreed fee amount from each contribution. The fund will pay
this amount to the scheme advisor.
No scheme advisor fees will be deducted for paid-up members.
Changes in Fees or Charges
Any changes in the fee or charge structure will be subject to
three months’ notice, unless a change in circumstances warrant
the change, such as a change in legislation. The above does not
apply to any advisor fees, as these fees are agreed on between
your employer and your advisor.
Reporting of Fees
Your annual member benefit statement will indicate the
applicable fees for the period. For more information about the
fees and charges please contact your financial advisor.
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COMPLAINTS PROCESS12If you are not satisfied with any aspect of your membership
of the fund you can write to the fund’s principal officer. Your
complaints or comments should be directed in writing to the
registered office of the Distinction Umbrella Pension Fund and
the Distinction Umbrella Provident Fund:
Physical Address:
89 Bute Lane, Sandown
Sandton, 2196
Postal Address:
PO Box 782823, Sandton, 2146
Email Address: [email protected]
Telephone Number: 011 305 2300
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The Fund must respond in writing within 30 calendar days
of receiving your complaint. If your complaint is not resolved
to your satisfaction by the Fund or if no response is received
within 30 calendar days after receipt of the complaint, you may
contact one of the following legislative bodies that have been
tasked to look after your interests as a customer:
For Fund Complaints:
The Pension Funds Adjudicator
P.O. Box 580, Menlyn, 0063
T: 012 346 1738
F: 086 693 7472
W: www.pfa.org.za
For Long–Term Insurance Complaints:
The Long–Term Insurance Ombud
Private Bag X45, Claremont, 7735
T: 021 657 5000
ShareCall: 0860 10 3236 or 021 674 0951
W: www.ombud.co.za
For complaints regarding a financial advisor
FAIS Ombud
P.O. Box 74571, Lynnwood Ridge, 0040
T: 012 470 9080
F: 012 348 3447
W: www.faisombud.co.za
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CONTACT US13Physical Address:
89 Bute Lane, Sandown
Sandton, 2196
Postal Address:
PO Box 782823, Sandton, 2146
Email Address: [email protected]
Telephone Number: 011 305 2300
For more information, please visit our website:
www.fedgroup.co.za.
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SUMMARY OF RISK BENEFITS14
Death
Critical Illness
Tutor Cover
Critical Illness Cover provides a standalone benefit in the
event of an employee contracting a life-threatening disease
or disorder. Critical Illness Cover can also be extended to the
employee’s spouse.
Tutor Cover is a telephonic offering providing academic
assistance that allows learners to interact with a qualified
teacher on a variety of subjects. The cover is available to all
schoolgoing children from all grades whose parents or guardians
have any risk benefits with Fedgroup.
Life Cover
Life Cover pays a lump-sum amount in the event of an
employee’s death, giving their family much-needed financial
support. Employers choose a lump-sum amount that is either a
multiple of annual salary or a flat rand amount.
Funeral Cover
Fedgroup’s Funeral Cover usually pays out within 48 hours.
Employers can easily choose between our three options:
employee only, family (employee, spouse and child) and
extended family (employee, spouse, child and parents).
Burial Repatriation
Upon death, this benefit provides for transport of the deceased
family member from anywhere in South Africa, Lesotho,
Swaziland, Zimbabwe, Botswana, Namibia or Mozambique
(south of the 22-degree latitude) to the funeral home closest to
the place of burial in South Africa.
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Disability
Income Disability Cover
Income Disability Cover takes care of employees who become
incapable of performing their jobs, whether temporarily or
permanently. The benefit remains in place until they recover,
reach the benefit expiry age or pass away.
Capital Disability Cover
Capital Disability Cover protects employees who become
permanently and totally incapable of performing their job,
either with their current employer or any other employer.
Grocery Cover
Grocery Cover is a benefit option available on Life Cover and
Funeral Cover and pays out a voucher benefit upon the death
of the member or spouse, to assist the beneficiary with family
expenses.
Education Trust Cover
Education Trust Cover takes care of children’s futures by paying
an education lump-sum amount into trust. The lump-sum
amount is calculated as a percentage of an employee’s annual
salary. It is available either as a standalone benefit or as part of
Life Cover.
Spouse and Children’s Pension Cover
In the event of the death of an employee, the Spouse and
Children’s Pension Cover provides a lump-sum amount towards
the cost of purchasing an annuity for the spouse and/or
children.
OF INDEPENDENTFINANCIAL THINKING
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