1 8 T H A N N U A L G E N E R A L

M E E T I N G CHAIRMAN’S ADDRESS

WELCOME, WELKOM, WAMKELEKILE

It is my privilege to welcome you to the 18th Annual General Meeting of the CRF for Local Government.

I would like to start my address by reminding each and every one of you of the importance of saving for your retirement and to preserve your benefits, no matter what.

Jim Rohn: “If you don’t design your own life plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Never as much as you hoped for”.

YEAR UNDER REVIEW - RETURNS

We sustained growth in investment returns, in spite of volatile investment markets and uncertainty

Your Fund’s assets and reserves grew to more than R17 Billion

NET INVESTMENT RETURNS

*We believe that the Protection Portfolio and/or the Moderate portfolio should be chosen by members when they are near to retirement.

** Allowed for a full inflationary increase in monthly pensions

Portfolio Growth Portfolio

*Protection Portfolio

*Moderate Portfolio

**Pensioner Portfolio

Net Returns 24.55% 6.52% 12.84% 12.37%

YEAR UNDER REVIEW – RETURNS CONTINUED...

Returns on the Growth Portfolio since inception have been 15.06% per annum for 18 years. Real return of inflation (above inflation return) of 9.02%.

We need to manage our investments ensuring that;

•Members are not exposed to the extreme downward movements in the market

•Never invest chasing the highest income returns

• This is a DC Fund where the individual member carries the investment risk

Strategic decision to invest 2% of total asset value in Africa-investment opportunities – sustain reasonable returns for members

MEMBERSHIP OF THE FUND Number of contributing members to 37 009 on 30 June 2014

(Net increase of 1 788 from previous year, 5% growth in active membership)

New Members joining the Fund were 3537.

Members leaving the Fund; 503 retirements (increased from 471 in 2013), 116 resignations, 1 retrenchment, 176 deaths

Continued growth in membership ensures, fairly young profile endures, assisting us to broke for death and disability benefits at competitive rates

Members are encouraged to preserve: to accumulate sufficient funds for retirement. Members leaving can leave their investment in the Fund or transfer to another Fund.

PENSIONER MEMBERS Number of pensioners continues to decrease, no new pensioners added

Although representing a small percentage of membership, forms an important component Separate newsletter

Special ad hoc bonus, equal to 100% of monthly pension was paid in December 2014

ADMINISTRATION Fund is administered by Verso Financial Services

Administration costs increase annually as is based on the total number of members in the Fund, which is steadily increasing each year.

Total cost of administering the Fund expressed at a percentage of pensionable salaries – amounts to just over 0.8%, good compared to industry norm of more than 1%

BOT prides itself, manages to maintain costs below industry norm

AMENDED COUNCILLOR CONTRIBUTIONS As part of strategic objective, opened our membership to Councillors after the May 2011 elections

Eagerly wait on FOA implementation date, allow employees to transfer membership to Fund of their choice

Slow process, detrimental to employees

The Fund has never prevented a member from exiting our Fund where possible

To further encourage councillors, amended total councillor contribution rate to 15% (7.5% councillor contribution and 7.5% employer contribution)

IMPROVED BENEFITS Improvements made to benefits at no cost to members Funeral Benefit increased from R20 000 to a R25 000 scale

Increased insured death benefit for members in Category A, B, C, E, F

Increased lump sum disability benefits for members in categories A and B

Thank you to the HR departments, Union leaders, Trustees, Principal Officer, Administration, Investment and Communication team who continue to interact with members ensuring that they know about their Fund and pension matters

Our members are actively involved, questioning aspects of the Fund, informing us how we can better serve them and keeping us on our toes. We appreciate that.

RETIREMENT REFORM

Last year reported National Treasury issued various documents to the Retirement Fund Industry for comment

Promulgation of two new pieces of legislation, Taxation Laws Amendment Act (TLAA) and Financial Services Laws General Amendment Act.

Important to note: These changes will no longer come into effect on 1 March 2015, delayed by at least a year.

GOVERNANCE BOT relooking at its organisational structure to meet demands of a National Fund.

Looking at committee system to ensure better efficiencies and accountability.

Ernst & Young re-appointed as the auditors, clean audit report.

Board’s appreciation to the Chairman and members of the Audit Committee for their dedication, pursuing matters of good governance in overall administration of assets.

THANKS

The task of serving as a Trustee is becoming more onerous in view of new legislation and the size of the Fund’s assets (more than R17 billion). In terms of the Pension Funds Act and common law, Trustees must make decisions in members’ best interest.

The fiduciary duties of the Trustees also demand that they objectively apply their minds to any matter before the Board. Trustees must also be willing to undergo training to be aware of these duties and to be able to best fulfil that role. We are privileged that people are prepared to serve in this capacity and I thank all our Board members for their willingness to serve and perform their duties in the past year.

I would also like to thank those of you who will make yourself available for election later today.

THANKS – SERVICE PROVIDERS

THANKS- PRINCIPAL OFFICER AND CIO

Brian Shepherd (Principal Officer)

Kobus Sadie (Chief Investment Officer)

TO THE BOARD - THANK YOU FOR THE HONOUR AND OPPORTUNITY TO SERVE AS YOUR CHAIRMAN AS WE UNITE IN STRIVING TO GIVE THE BEST SERVICE TO OUR MEMBERS. I SALUTE YOU ALL FOR A JOB WELL DONE!

Soyisile Mokweni André Smith Annette Cawood Eddie Scott Clara Meyer

Peet Louw Ian Iversen Andile Gqabi Willem van Gass Johan Beukman