Pensions world by Lexis Middle East

JANUARY / MARCH 2014 VOL 17 No 1

• Non-payment of contributions now a criminal offence • Hope for our future: Ensuring the protection of our human capital for future generations • New technologies address retirement industry challenges • Retirement considerations

SOUTH AFRICA

www.lexisnexis.co.za

• Investing in Africa

PENSIONS CURRENT EVENTS WORLD Courses and Seminars SA March 2014

COMMENT

Quantitative managers can deliver performance at lower cost and lower risk

GOVERNANCE AND COMPLIANCE Investment governance tips for retirement funds

The Financial Services Laws General Amendment Act, 2013 became law in January 2014 and effectively criminalises those responsible for not paying contributions due to retirement funds. Kobus Hanekom explores the implications of this new law for companies, financial directors and retirement funds.

Divorce and pension interest

The industry is continuously being pressed to deliver higher retirement benefits at lower operating costs. Brian Anderson discusses how technology can be streamlined to achieve this objective.

Retirement considerations

The payout of pension interest to non-member spouses continues to provide challenges for funds and administrators alike. Lize de la Harpe explains how following the rules can reduce the burden of paying pension interest.

Do we need to rethink the way we approach benefit funding and costs? Anne Cabot-Alletzhauser, puts forward some revolutionary insights on how to correct the defined contribution fund dilemma.

New technologies address retirement industry challenges

How does investment governance translate into everyday fund practice? Mark Lindhiem guides trustees towards action driven solutions to this challenge.

RETIREMENT SAVINGS REFLECTIONS Hope for our future: Ensuring the protection of our human capital for future generations

In our drive to reduce retirement fund costs and deliver higher value, Eldria Fraser makes a case for the use of a quantitative approach towards retirement investing.

FINANCIAL SERVICES LAWS GENERAL AMENDMENT ACT Non-payment of contributions now a criminal offence

Quantitative managers can deliver performance at lower cost and lower risk

C O N T E N T S

Legal Update

LEGAL UPDATE

Nancy Andrews sets out a succinct summary of the Protection of Personal Information Act (POPI) and how it will impact on retirement fund operations. She also highlights key issues raised in the recent 2012/2013 Pension Fund Adjudicator ’s report, demonstrating how the Adjudicator’s commitment to speedily resolve issues has had a positive impact on our industry.

SERVICES DIRECTORY

Jaco-Chris Koor ts discusses how additional retirement savings can be achieved effectively, utilising “new generation” retirement annuity vehicles.

INVESTMENTS Investing in Africa

Gyongyi King, explains how best to unlock the inherent potential of investment in Africa and the way we should go about navigating this alternative asset class’ terrain.

March 2014 Pensions World

Products and Services Fund Administration and Accounting Services Consulting Services Actuarial Services Investment Consulting Services Legal Services

Home Loans Credit Life Insurance Unclaimed Benefits Fund Umbrella Retirement Fund Umbrella Beneficiary Fund Compulsory and Voluntary Funeral Cover

Personal Financial Advice Individual Products Funeral Cover Savings and investment â&#x20AC;&#x201C; Goal Keeper, Goal Getter

Legal Seminars Retirement Fund Seminars Vukani Member Education

Health Risk Management

NBC Holdings (Proprietary) Limited is a registered financial service provider (FSP number 991) Web: www.nbc.co.za | Email: info@nbc.co.za

Leaders in People Benefits in Africa

C U R R E N T

Courses and Seminars LexisNexis Professional Seminars and Conferences for 2014 EVENT

DATE

VENUE

VAT Update Seminar Presented by Christo Theron

12 May 2014

Focus Rooms, Johannesburg

13 May 2014

CSIR Convention Centre, Pretoria

14 May 2014

Southern Sun The Cullinan, Cape Town

15 May 2014

Southern Sun Maharani Towers, Durban

Mine Health & Safety Seminar Presented by Willem le Roux, Pieter Colyn and Celeste Coles

22 May 2014

Emperors Palace, Johannesburg

Financial Planning Institute Convention 2014

25-26 June 2014

Sandton Convention Centre, Johannesburg

E V E N T S

Contact us for more information: Tel: 031 268 3255/3052 • Fax: 086 682 6461 • Email: seminars@lexisnexis.co.za Book online at www.lexisnexis.co.za

STILL NOT A SUBSCRIBER? CALL 0800 00 4493 Managing Editors David Weil / Des Meyer Editor Atiyya Pilodia Designer Lulu Pillay Advertising enquiries to: Michelle Baker (031) 764 6725 (tel) 073 137 1231 (cell) 086 620 6768 (vax) michelle.baker@mediamarx.co.za www.mediamarx.co.za Editorial enquiries to: Atiyya Pilodia (031) 268 3047 (tel) 086 754 6967 (vax) atiyya.pilodia@lexisnexis.co.za

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ISSN: 0409070637 Printed and bound by Interpak Books, Pmb

March 2014 Pensions World

Reproduction, copying or extracting by any means of the whole or part of this publication must not be undertaken without the written permission of the publishers.

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C O M M E N T

Comment F

or those interested in numerology and 2014 predictions and symbol meanings, add 2, 0, 1, 4 and you get 7. Pop culture attributes the numerological meaning to number 7 as “analytical and self-examining”.

As we begin 2014 and set our intentions for what we hope to achieve as an industry for our funds and members, it may be useful to reflect on how far we have travelled to get to this point and where we are headed. It is no secret that the financial services industry and specifically its retirement funds’ subsection is seen to control much of South Africa’s wealth without actually producing a “thing” that one can hold in one’s hands. This coupled with certain unseemly scandals over the last ten or so years, has given our industry a bit of a bad rap. Do we deserve this reputation? As per the old adage, it takes a village to raise a child. It takes many villages to manage retirement funds. Have all the villagers always been honest and upright? Bulking, hidden costs and secret profits have plagued the country’s perception of us in the past. Have we achieved anything in righting public opinion and serving our members better? Reflecting on the way business conduct has changed in our industry, it strikes us that our emphasis is definitely now firmly placed on ensuring that our defined contribution members retire from our funds with a semblance of decent benefits. Although that may seem like a no-brainer to an outside observer, the complexity surrounding managing and administering retirement funds has oftentimes distracted us from this fundamental objective. It is not easy to keep one’s eye on the ball when hit from all sides by increasing legislative, governance and administrative fund complexity. How have we faired? Over the past two or so years, National Treasury has demonstrated a growing concern regarding the costs spent on administering and investing retirement fund monies. Their eye is also very firmly turned towards the way we govern and manage our retirement funds. Most of us villagers play fair and play by the rules. However, those who colour outside of the lines will no longer be able to get away with fundamental rule breaking. The Financial Services Laws General Amendment Act, 2013 was passed into law in January 2014. This legislation gives the Financial Services Board the power to severely fine and imprison company directors and financial directors responsible for not paying over contributions due to retirement funds. As is the case when most far-reaching laws are passed, there are as many questions as there are answers. Kobus Hanekom with the typical precision we have come to expect of him helps us understand the implications of this new legislation and assists us in asking the right questions regarding its consequences. This edition of Pensions World would not be complete without new thinking which puts the proverbial cat amongst the pigeons. What genre of costs is actually reducing members’ final retirement benefits? And what is really causing defined contribution funds to pay out woefully inadequate benefits to retirees? Anne Cabot-Alletzhauser says it like it is. Amongst other hard-hitting issues raised in her article, she advocates for

March 2014 Pensions World

David Weil Managing Director Investment Consulting and Trustee Services

a greater partnership between company and retirement fund, to assist members in saving their benefits for retirement. Following on from the streamlining and cost savings objectives raised by National Treasury, Brian Anderson expands upon alterations required to our administrative systems, processes and technology, in order to streamline the administration of retirement funds. It is no secret that members who rely on their defined contribution funds as their only source of retirement savings will simply not be able to retire with enough to live on in old age. With this in mind, Jaco-Chris Koorts unpacks the merits and uses of “new generation” retirement annuity vehicles, for additional retirement savings purposes. In our search for higher investment returns and alpha (investment return in excess of benchmarks), Gyongyi King explains how to go about making investments in Africa without losing our shirts. In keeping with this investment quest, Eldria Fraser argues that a more exacting approach to investing in the form of a quantitative approach should yield better and more reliable investment results. However, even with the best investment types, approaches and managers, fund investment management can go horribly wrong. Mark Lindhiem gives some excellent tips for trustees who have day jobs and are not investment experts, on improving funds’ investment governance. On the legal front, Lize de la Harpe reminds administrators and trustees on methods to be deployed to ensure that pension interest can legally be paid out to non-member spouses, by retirement funds. Nancy Andrews also nicely summarises the Protection of Personal Information Act (POPI) and gives us thoughts on its’ impact on retirement fund management. Lastly, she highlights key issues raised in the recent 2012/2013 Pension Fund Adjudicator’s report, which demonstrates that the Adjudicator’s office is working hard to resolve complaints in an efficient manner. In keeping with our theme of numerology and predictions, it is the editor’s prediction that we will see a trend through all areas of our industry this year, to search for ways to unite us in providing better benefits to our members. We wish our readers a successful and invigorating year! p

F I N A N C I A L S E R V I C E S L A W S G E N E R A L A M E N D M E N D A C T

Non-payment of contributions now a criminal offence The Financial Services Laws General Amendment Act, 2013 was signed into law on 16Â January 2014 and amends section 37 of the Pensions Funds Act. From the effective date which is yet to be announced, failure to pay retirement fund contributions will become a criminal offence. Therefore on conviction, failure to pay fund contributions will attract a fine not exceeding R10 million and or imprisonment of up to 10 years. 6

Kobus Hanekom Head, Strategy, Governance and Compliance, Simeka Consultants & Actuaries

March 2014 Pensions World

In addition to criminalising the nonpayment of contributions, the revised section 13A(8) seeks to attach personal liability to the person responsible for not paying the fund contributions. The revised Act stipulates that “. . . every director who is regularly involved in the management of the company’s overall financial affairs . . .” will be personally liable for the payment of fund contributions. The new law will force retirement funds to take positive steps to ensure that requirements are met. For example, funds will have to request the employer to identify those who are personally responsible. Should the employer fail to do so, all the directors of the company will be personally liable. In the case of a closed corporation (CC) the members who are regularly involved in the management of the CC’s overall financial affairs will be liable. In other firms, all persons comprising the employer’s governing body who are regularly involved in the firm’s overall financial affairs, as the case may be, will be liable. This new requirement constitutes a significant business risk for employers and their staff and is one that will have to be managed carefully in the future.

The message to employers is clear: The payment of retirement fund contributions is now protected. If an employer fails to pay accordingly, the employer will be guilty of an offence. One or more director(s) will be held liable for the payment of the contributions in their personal capacities and may even be imprisoned for 10 years or fined up to R10 million.

The message to financial directors is a little different, but equally clear: If the employer is not able to pay fund contributions, participation in the fund must be terminated without delay or financial directors may be liable for the payment in their personal capacity.

Temporary suspension as a solution Most fund rules allow the employer to terminate the fund or in the case of an umbrella fund, to terminate participation in the fund. Terminating a fund is a final and drastic measure, especially if the employer believes that the cash flow concerns are of no more than a temporary nature.

March 2014 Pensions World

Smaller employers are more frequently exposed to temporary periods of cash flow constraints. Hence it is proposed that a temporary suspension of participation arrangement be introduced for umbrella fund participants, where appropriate. The temporary suspension is less final and will therefore help the responsible person to manage the situation a little better. Such temporary suspension will nevertheless have a significant and direct impact on the members and will thus have to be managed very carefully.

Is it the financial director’s job to make sure that the employer has the money to pay contributions? People tend to agree that fund contributions should enjoy special protection. One of the reasons why previous measures failed is because once an employer is insolvent, deterrents in the form of additional fines and penalties have little effect. Identifying the director/officer responsible for non-payment and holding that person personally liable is bound to have much more success. Another reason is that previously, to a large extent, the non-payment of employer contributions was regarded as a breach of contract. Deducting contributions from members’ salaries and failing to transfer them to a fund was considered to constitute as theft. However it was not that easy to hold the employer or a director liable in their personal capacity and recover the losses suffered by the fund members. Whilst the protection affored to members is welcomed, concern remains regarding the full implications which have not yet been fully considered and clarified. It appears fairly clear for example, that if it can be proved that a financial director elected to buy raw material for a new project in preference to paying fund contributions, they will likely be held directly responsible. What however will the implications be for a financial director who cannot pay the contributions purely because there are insufficient funds in the company account? If the inability to pay fund contributions constitutes a legal excuse, under which exact circumstances will this be allowed? We may speculate on this matter, but ultimately we will have to wait and see how our courts interpret the amended section. In the interim trustees must ensure that fund rules and benefit structures best enable the parties to find creative new solutions for these very real challenges. p

People tend to agree that fund contributions should enjoy special protection. 7

F I N A N C I A L S E R V I C E S L A W S G E N E R A L A M E N D M E N D A C T

R E T I R E M E N T

Hope for our future:

S A V I N G S

Ensuring the protection of our human capital for future generations

R E F L E C T I O N S

“I have seen the future . . . and the future is now.” One would be hard pressed to find a defined contribution model for retirement funding that’s succeeding . . . anywhere in the world. More than 20 years have passed since South African retirement funds began their enthusiastic conversion from defined benefit to defined contribution fund arrangements. Despite the best intentions of this new, transparent, choicedriven model, members aren’t coming out ahead. In spite of strong bull market conditions over the period, members are now only retiring with income replacement ratios of around 31% on average. Clearly, this failure could have profound implications for the first wave of baby boomers that currently stand on the cusp of retirement in a world where economic growth appears to have slowed down to a painful crawl. Extraordinarily enough, South Africa may become one of the first countries to come to grips with the reasons for this widespread failure. If the noises from National Treasury and the retirement industry are anything to go by, insights and resources are emerging, albeit on wobbly legs, which might well deliver answers. These answers may apply not only to South Africa, but to any quasi-developed economy that may have elected to venture down the defined contribution route to retirement funding.

Anne Cabot-Alletzhauser Head, Alexander Forbes Research Institute

March 2014 Pensions World

What has changed? Several critical insights have emerged: • We are now beginning to appreciate the critical role one’s place of employment plays in tackling the issues of savings and individual welfare in this country. First job often translates into first income and as such, the first opportunity an individual has to consider how that income can best be deployed to cushion oneself and one’s family from life’s inevitable surprises. • Retirement funds and their associated employee benefits are just one part of an important contract that must exist between employer and employee for ensuring an individual’s financial/physical and mental wellness throughout their working life (and into retirement). The economic benefit to both parties is becoming irrefutable. • Extracting the full value of retirement fund benefits demands that trustees, employers/unions and policy makers shift their governance focus from the fund to the individual member within the fund. The following must be addressed:

– How well are these individuals doing on that path to economic stability?

– Where can we as the trustees and guardians of that journey intervene through good counsel, sound policies and appropriate defaults to help ensure that the road is kept clear and straight?

– How can we make sure that the journey is efficient and cost effective?

• Getting it right demands effective human resources/ communications capability and a constant dialogue to ensure that policies that touch upon an employee’s well-being are integrated and comprehensive.

as a population could do to ensure that the balance tips towards the latter outcome. To achieve any of this demands an entirely new consulting model: not one that performs a purely administrative, governance oversight function. Rather, one that captures and integrates the effective outcome of a whole set of inter-related decisions.

What must a new consulting model look like? Designing a consulting model to best serve member needs, demands a dramatic shift in our priorities. It starts with having the right technology. Being accountable for members can only be meaningful if one can monitor where they are in their financial journey and whether the strategies that have been put in place will actually improve their lot, over time. We also know that giving trustees insights as to how other boards are grappling with similar issues, can provide a powerful stimulus for getting trustees to “do the right thing” if they wish to remain competitive. So one’s modelling capabilities are greatly enhanced if we are able to provide those points of comparison. What establishing an effective consulting model is really all about though, is determining the right amount of time to the right debates. A tool that can monitor a member’s financial journey should also be able to help trustees to stress test the impact of various different potential decisions on that member’s financial position over time. The case study below illustrates how we could potentially change this consulting dialogue.

Changing the consulting dialogue – A case study

National Treasury spells it out – there is a whole new world of accountability out there for trustees, employers and their HR departments, unions and members that needs to be addressed if this is going to come right. In their words:

The fund in question here belongs to a real-life South African company in the IT sector.

“. . . trustees are not just accountable to the governance of the pension fund, but to the financial well-being of the members throughout the course of their membership in the fund”.

In the graphs below, we see two key sets of information.

In other words, all of the stakeholders in the retirement benefits value chain need a clear understanding as to which decisions have the greatest impact on member outcomes. These must become the decisions that we all must commit to getting right. We need a comprehensive understanding of where value is being destroyed and where is it being created if we are going to identify what we

March 2014 Pensions World

Step 1: The fund’s current profile

In the left-hand spider graph, we see the range of input/ assumptions that provide the critical guidelines for the management of the fund. The retirement fund for this particular IT company dictated by the following: • Contributions from members to the fund average around 15% per annum • Costs for member risk benefits, etc. average around 1.3% per annum

R E T I R E M E N T S A V I N G S R E F L E C T I O N S

• Costs for the investment strategy employed by the fund average around 40 basis points (0.4%) per annum • This investment strategy is expected to deliver 50 basis points (0.5%) of performance in excess of the fund’s benchmark – before costs – for the next 40 years • Expectations of performance of the fund’s strategic asset allocation, set out in the investment policy document, are for 4.5% real returns (after inflation) per annum – for the next 40 years • Retirement age is 60 years • Given that the majority of employees start when they are 20 years old, the term of investment turns out to be about 40 years per employee. In the right-hand graph, we see a scatterplot that reflects exactly where each member of the fund, is likely to end up at retirement (given what they are invested in today and how well they have made decisions about their retirement savings in the past). Each dot on the graph represents, according to the bottom axis, exactly what age that individual is today. The dot’s position against the left axis shows the income replacement that individual is likely to receive, with projections that assume the individual will continue to save at the same rate until retirement. What this graph tells you about this particular fund is that, if we add all those bits of the puzzle together, we can calculate that the average salary replacement for

each member of this fund is likely to be around 44%. The trustees are likely to determine that this is clearly not enough for members.

Step 2 So . . . How does this stack up when compared to other funds in the same industry – or even other funds in the broad sample of retirement fund clients? The graph below maps those comparisons on the same spider graph. The orange lines show the average situation for other companies in the survey and the grey lines provide us with an appropriate comparison to all funds being monitored. To some extent, these comparisons are perhaps more of interest to the employer as opposed to the trustees of the fund. An attractively positioned benefits package could well be a talent magnet. But this has become less and less so as financial pressures look for more immediate financial advantages for potential employees. Still, this remains a useful starting point.

Step 3 For most boards of trustees, the more critical starting point would be to test what changes could be made to the investment strategy of the fund to alleviate the problem of a low replacement ratio. For most boards, the following three options reflect their usual starting point: • Can we change the managers and up the alpha of the fund (return in excess of the strategic asset allocation benchmark)?

March 2014 Pensions World

• Can we revisit our strategic asset allocation, or perhaps our estimates of expected returns on those asset classes?

But what if we were also able to integrate the actual behaviour of their members? What would our outcomes then look like?

• Can we gain significant advantages in lowering our costs?

To begin with one of the dirty little secrets that often elude trustees is that the pensionable pay that members declare is more often than not, some fraction of what they actually live off each month. This means that if a member’s total retirement fund contributions are 20%, but their pensionable salary is only 50% of total take home, they are effectively only saving 10% towards that 70% replacement ratio. Not much chance of a happy outcome there.

The surprising answers are: no, no and no! To move from a 44% replacement ratio to a 75% replacement ratio, the fund would have to generate more than a 6.5% real return (after inflation and after costs), consistently over the next 40 years. If we look back on the last 12 years, this seems relatively simple. We’ve easily achieved that average 6% real return. But in the wake of the global financial crisis, prospects going forward are grim at best. The same story applies to upping the potential for alpha in the fund. The operative word here is “potential”. To shift the fund to a 75% replacement ratio would demand a consistent, 40 year outperformance of the strategic asset allocation benchmark of 170 basis points. Again, this was doable during our extraordinarily strong bull market of the last decade. However for this to persist for another 30 years is highly unlikely. The most interesting part of this exercise, is how little is actually gained by reducing costs. This is not to say the fund shouldn’t look for every means to enhance returns. However, as we stated in the beginning, the point of this consulting exercise is to help trustees understand the magnitude of change each decision brings with it. Asset management fees are typically charged as a percentage of assets under management over each year and administration fees are typically charged as a one-off fee each time the funds flow in. As a result, a reduction in asset management fees has significantly greater impact than a reduction in risk benefit costs or administration fees. Note in the graphs above that over the course of 40 years for the fund, a reduction in 50 basis points in fees for asset management can translate into an additional 7% to the replacement ratio, whereas a reduction in administration and benefit fees, adds a mere 2% to the final replacement values.

Getting to the crux of the problem Up until this point, we have been debating a range of issues that boards of trustees typically grapple with. The data and outcomes we’ve been using employ the kinds of assumptions that most boards are shown. This is an idealised world where members behave as though they will save continuously and make all the right decisions during the course of their journey.

March 2014 Pensions World

Equally important, the IT industry appears to be going through a fair amount of contraction and expansion. This means employee turnover sits at a fairly high 19%. But the really crippling aspect of this turnover is that those members who are retrenched are simply not preserving their accumulated savings. In fact, across all funds, the average preservation rate is only 7%. By including these two member realities into our analysis, we suddenly see the real replacement ratio for the fund. This insight appears to be something of a show-stopper. This would indeed persist as one known only to the members when they actually retire, if we are unable to integrate both the actual member experience with the fund with the projected experience. But just as this consulting framework changes our focus dramatically, so does it allow us to see solutions through a more effective lens. By playing with all the relevant inputs, we can now see dramatically that the most impactful decision to encourage is preservation. This must be done both when an individual is brought on-board with the employer and when the member leaves the fund to go to another employer. This means that the conversation very definitely moves on to include the employer and their HR departments. It essentially means that boards of trustees will have to take National Treasury to heart in finding ways to expand their accountability to the individual employee. It means having long, hard but hopefully productive conversations with the employer around HR policies that recognise the sanctity of the retirement fund and benefits, ensuring that the two sets of policies work effectively together. It means that fund boards must have even stronger communication messages to their members about the trade-offs they make with each choice they make in their plan decisions. And, in an ideal world, it means we now need to provide both members and HR departments with tools that can translate those choices into economic realities 30 to 40 years into the future. By getting these consulting steps right, we actually stand an excellent chance of turning back the tide of inadequate funding outcomes that are currently crashing onto our retirement savings shore. p

R E T I R E M E N T S A V I N G S R E F L E C T I O N S

Brian Anderson Head of Business Development, Africa, SunGard

New technologies address retirement industry challenges

he South African retirement industry is grappling with the need to accommodate reforms and deliver on new demands to strengthen retirement savings at a lower operating cost. Optimised investment technology infrastructure offers certain solutions. The main challenges facing the industry include cost containment, regulatory changes and growth imperatives. A range of pending retirement reforms are putting pressure on the sector and demanding new levels of efficiency, agility and compliance. Recent research1 found that the wave of new regulations governing issues such as solvency and market conduct could swamp retirement funds and long-term insurers with costs and compliance requirements. This research also found that the new rules could distract retirement fund and insurance managers from the more urgent task of running profitable businesses at a time when the industry is under stress.

Four or five years ago, one could expect double-digit returns from retirement funds, but now the returns are substantially lower. In fact the cost of administration is resulting in some funds delivering returns far below inflation. These costs are crippling the industry and savings are being eroded by the dual manager and administrator process. This changing environment presents the industry with both challenges and opportunities. Addressing the challenges will force changes in fund administration, bringing with it an opportunity to embrace advanced technology which will help to streamline operations, improve efficiencies and lower costs. Much of the retirement sectorâ&#x20AC;&#x2122;s administration is currently slowed by the use of outdated tools and systems, duplication of processes and extensive manual interventions, which adds to the cost of administration. With the sector actively seeking to deliver greater returns to retirement fund beneficiaries, the answer March 2014 Pensions World

and funds are able to adapt in line with the changes, rapidly and cost-effectively. Crucially, this also enhances compliance and governance. Now that trustees must meet much more stringent fiduciary obligations, a sophisticated system offering a strong audit trail and better management and investment checks is required to ensure compliance and reduce the pressure, particularly for external trustees who serve as caretakers of these funds. In addition, new platforms are coming to market with capabilities that allow for online self-service. This passes the administration burden to the initiator, further reducing cost and complexity.

is to achieve greater replication of various operations through automation and superior cost efficiencies using outsourced or managed services. Fund administrators need to move away from spreadsheets, to intelligent platforms which are agile and scalable. These platforms must offer not only the management of investments and savings by large volumes of people, but also the ability for policy-holders to choose their investment in line with their appetite for risk as well as being able to repeatedly amend these choices. A sophisticated solution or platform that is scalable has the ability to repeat an operation in a standard fashion for large volumes over multiple permutations. When these solutions are delivered in a managed services environment, the cost of administration can be reduced by between 20â&#x20AC;&#x201C;25% per member. At present, there tends to be a clear distinction between the management of the asset and the management of the liability, placing an additional layer of cost into the operations. In a hosted managed services environment the platform managing liabilities, policies and member records could also manage assets on the same platform, reducing the need for another vendor and third leg in the cost chain. Furthermore, the managed services model allows funds to benefit when sweeping changes are introduced across the sector. In a parameterised system, there is no need to change the underlying code, but rather only certain variables. When the system is shared in a hosted environment, policies are processed in a universal manner, duplication of effort and costly coding is avoided, March 2014 Pensions World

Retirement funds and their trustees are also challenged in keeping up with changes in risk management. Not only do they have to deal with demographic challenges and an alarming fall off in yield, they also have to grapple with risk management concepts that were previously the domain of the higher echelons of sell-side investment banks. For retirement funds there is an obvious investment required in technology and data management, in order to ensure the reliability of their metrics. Financial modelling and actuarial calculations must be carried out consistently, adapting to changes in our environment. Where the population is not driven or incentivised to save, the life expectancies of an older generation is increasing but HIV/Aids is impacting on the younger population feeding the retirement fund. To ensure accuracy and consistency, funds need effective, sophisticated actuarial evaluation and modelling tools that build on a repository of models created over a period of years. Improved infrastructure and processes will also enable agility and shorter time-to-market with new products. They will deliver significant improvements in compliance and risk mitigation, and eliminate duplication in processes. In the face of a changing environment, retirement funds also need to invest in robust platforms that support new operational requirements, including analytics, business intelligence and mobility. By modernising their infrastructures and putting in place intelligent systems which are purpose-built for the sector, retirement fund administrators are better placed to contain costs, improve efficiencies and compliance and respond faster to regulatory changes, as well as delivering greater returns. p

FOOTNOTE:

PwC and the Centre for the Study of Financial Innovation

R E T I R E M E N T S A V I N G S R E F L E C T I O N S

R E T I R E M E N T S A V I N G S

Retirement considerations

R E F L E C T I O N S

March 2014 Pensions World

R E T I R E M E N T S A V I N G S

Jaco-Chris Koorts Product Manager, Glacier by Sanlam

We all dream of having a carefree and financially healthy retirement. Unfortunately, for some, this dream will never become reality. There are a number of reasons for this, including: • Not preserving retirement savings when changing jobs • Not achieving the expected investment return on retirement savings, or fees eroding too much of the retirement savings • Not saving enough for retirement during one’s working lifetime. It is generally accepted that, in order to receive an adequate post-retirement income, one must save at least 15% of annual salary income throughout one’s career. Of course, the later a member starts to save towards retirement, the larger this proportion needs to be.

Advantages of a retirement annuity The Retirement Annuity (RA) has the following characteristics: 1. The contributions paid into the RA are tax deductible up to a maximum of 15% of non-retirement income.

What Is non-retirement income?

Assuming the employee is in full-time employment and is remunerated with a basic salary plus bonuses and commissions. If one is a member of a company fund with the basic salary being pensionable and commission and bonus is not pensionable, then the employee may claim 15% of commission and bonus as a tax free deduction to a RA.

For those who are self-employed, all remuneration is non-pensionable and they may claim up to 15% of remuneration as a tax free deduction to an RA.

Choosing the correct retirement savings vehicle It is easy to become confused by the myriad investment vehicles available in the market. Therefore, the best place to start is by looking at the company’s own retirement fund. Most companies allocate a proportion of employees’ preretirement salaries to a dedicated retirement fund. The money is deducted from the employee’s salary for taxation purposes and there is usually a (limited) range of underlying investment options available. However if one is self-employed or if the company’s retirement fund permits contributions that are lower than the desired retirement savings, a retirement annuity would need to be considered.

March 2014 Pensions World

2. RA investment returns are not subject to income tax, capital gains tax or dividend tax. 3. The lump-sum pay-out at retirement or on death (a maximum of one-third of the accumulated benefit) may be tax-free within certain cumulative limits (currently R315 000). 4. On death, any benefits paid are free of estate duty.

R E F L E C T I O N S

R E T I R E M E N T S A V I N G S R E F L E C T I O N S

5. Part of the RA can be used to cover medical expenses on retirement.

Regulation 28 which restricts the maximum exposure to certain asset classes:

6. Payment of income tax is deferred. RA income is taxed in the same way as regular pre-retirement income. However, post-retirement income will likely be lower than pre-retirement income, which means that such income may be taxed at a lower marginal tax rate. However, by using a RA as a savings vehicle investments are “locked in” until normal retirement age. The earliest withdrawal from the fund will depend on the fund rules, but is usually age 55. The next question is which RA should be selected.

The new generation RA A misperception exists that RAs provide below par investment returns. This is not necessarily the case, especially with so-called new generation RAs. The features of this include: • Flexible contributions in line with a change in the investor’s financial circumstances.

Asset class

Maximum exposure

Equity

75%

Property

25%

Foreign

25%

A seamless transition from pre- to postretirement In the current financial market, retirees have a choice between two major product classes: a guaranteed life annuity (GLA) and an investment linked living annuity (ILLA). GLAs’ characteristics: • Income is guaranteed to be paid for life, i.e. there is no risk of outliving retirement savings.

• Ability to inject extra lump sums over and above monthly contributions.

• The income amount is guaranteed at inception, and can be either level or increasing at a predetermined rate.

• Choice to stop contributions and preserve accumulated benefits until retirement age.

• There is usually no (or low) payouts on death.

These can be purchased from most asset managers, certain life insurers as well as Linked Investment Service Providers (“LISPs’). If an RA is purchased directly from a specific asset manager, the underlying investments can only be made in a range of unit trust funds from that asset manager, or a limited range of unit trust funds from a few accredited asset managers.

ILLAs’ characteristics: • Full underlying investment freedom

– An ILLA can be purchased directly from an asset manager or from a LISP.

– The investment options available through a LISP are more numerous than those offered by investment managers.

– There is thus scope for a seamless investment strategy transition from an RA to an ILLA.

– Regulation 28 is not enforced under an ILLA.

However purchasing RA through a LISP, affords the following advantages: • A large range of investment funds to choose from. • Flexibility to invest in unit trust funds from multiple asset manager at the same time and centralised reporting on investment performance. • Switching between unit trust funds at any time, usually free of charge. • Investments directly into a share portfolio (asset managers do not usually provide this service).

Regulation 28 Underlying investments in an RA are governed by

• Income can be selected according to need and can be adjusted annually, as long as the chosen income is not smaller than 2.5% or larger than 17.5% of retirement capital • There is no guarantee that income will be paid for life. There is thus a risk that the investor will outlive their retirement income. In conclusion, as with RAs these ILLAs afford transparent design as well as investment and income freedom. p

March 2014 Pensions World

I N V E S T M E N T S

he African story continues to evolve and its economies improve. Now ranked amongst the fastest growing in the world, challenges with regards to accessing Africaâ&#x20AC;&#x2122;s financial markets still persist. These challenges often come from a lack of understanding of these markets. With that said, many investors (local and global) canâ&#x20AC;&#x2122;t shy away from the tremendous growth that is opening up. There is great long-term potential in many African countries. The question is; how does one unlock this potential? How do investors ensure that they develop a strategy that will yield results? Have they assessed all risks involved? Often, many are quick to tick the assessment steps off their checklists, only to find that they donâ&#x20AC;&#x2122;t have the necessary experience to tackle the investment beast that is Africa. Africa is a completely different market to the norm and many obstacles prevent successful investment. That is why it is imperative for continuous, on the ground research when identifying the best possible opportunities for investors. Most importantly investors must be educated on risks involved when entering these markets.

Gyongyi King Chief Investment Officer Caveo Fund Solutions

March 2014 Pensions World

Current observations show that private equity is the most popular access point into Africa, with enhanced return potential. This investment route is very popular among NGO’s, South African private equity firms and Scandinavian and US entities. However; private equity is difficult to model as little pricing information is available and it has unproven exit points in frontier markets. Since there is no liquidity, this results in capital being locked up for at least seven years or longer. These markets need to attract more international investors to increase liquidity, which is an issue for most investors. Equities are the most liquid, relative to other asset investments. Investing in equities offers investors the broadest country and economic sector exposure. However GDP growth doesn’t always translate into equity growth. Although they have not experienced a recovery from the global financial crisis in 2008 in-line with global markets, African equity markets have recently performed well, despite strong fundamentals on both macro and company levels throughout the last five years. Valuations are generally attractive and investors can buy decent companies in good economies, which are relatively cheaper than elsewhere in emerging or even frontier markets. Despite being small, fixed income is also experiencing growth due to its attractive yields, particularly amongst African domestic investors. Furthermore although it’s a relatively small investment space, African real estate is a key investment tool among South African institutions, resulting in a demand for commercial real estate. However, investors need to be aware of the fact that experience on the continent varies and therefore needs to be closely evaluated. Infrastructure is also in need of investment capital, from power generation, transmission lines and road networks to waste removal, mobile telephony and public-access broadband. One must

March 2014 Pensions World

consider the fact that direct involvement requires a great deal of expertise. There are certainly many access points to capture African growth potential. Often a liquidity premium is involved in the return potential. It is therefore crucial for investors to assess the alternative options carefully, as traditional assets like equities and bonds are the most transparent. Africa has its challenges from corruption to political risk, lack of information and inadequate regulation, market infrastructure, poor perception due to past crisis, weak means of resolving commercial disputes and excessive bureaucracy. Yet the continent has changed and will continue to evolve. We are seeing that more and more investors are buying into the big-picture story that Africa could be the emerging market of the next decade. Growth prospects are brighter than they have ever been and there are a number of interesting equity opportunities across the continent. However investors are cautioned to seek necessary assistance from expertise on the ground, as identifying and accessing such opportunities requires specialist knowledge and analysis. Overall, African markets, like many other emerging markets, are believed to continue to offer good longterm prospects for patient investors. Like any investment, there are always risks and unexpected events that can occur. It is important to note that emerging markets have outperformed over the longer term and are expected to continue in this trend for many years to come. One cannot guarantee that future growth will occur in a straight line. However, given the challenges faced by many first world countries, one can argue that by investing in Africa one has more to gain than to lose. The best approach to the African market is more of a passive approach – investors need to be patient. p

I N V E S T M E N T S

Quantitative managers can deliver performance at lower cost and lower risk

he cost of professional asset management services is in the spotlight, particularly in the context of governmentâ&#x20AC;&#x2122;s drive to reduce the impact of fees and expenses on retirement benefits. In this context, managers with a quantitative approach to investments are likely to find growing acceptance in the South African market. Sometimes misunderstood, quantitative investment managers, do not indulge in forecasts or undertake site visits, unlike traditional asset managers. Instead, â&#x20AC;&#x153;quantâ&#x20AC;? managers look at current market pricing with a view to buying assets that their valuation methodologies deem as offering value. A lack of understanding about quantitative management has led to incorrect perceptions of complexity. While generating valuations is what all managers do, quantitative investment specialists go about the process in a more mathematical way. What makes quant managers different is that they truly manage risk. They calculate how an investment will react under different market conditions ensuring portfolios are structured to avoid breaching risk tolerance as defined in the client mandate, being capital loss in absolute or relative terms. If a retirement fund manager trades a portfolio every month at a cost of 10 basis points, the reduction in benefits for members due to direct costs is 1.2% a year.

portfolio. These portfolios generally blend well with traditional portfolios due to their focus on risk and capital preservation, low or negative correlation with other portfolios and lower costs. An active beta strategy can also be applied where allocations are made away from a benchmark, using a pragmatic approach which includes valuation and behavioural-based strategies in order to deliver outperformance of the index. This is a way to make back the cost of investing and more. When markets look expensive, as the equity markets do now, a focus on risk is reassuring. Risk managers should protect clients against falling markets while capturing upside growth. They should manage risk in line with the benchmark and structure and de-risk portfolios when risk adjusted pricing indicates that this is necessary. By avoiding the demands of having to recover from capital losses, the idea is to make money from a secure base and benefit from the mathematical power of compounding, especially positive compounding. There is a strong role for quantitative investment in the context of retirement fund reform because managers are able to create cost-effective, broad-based and simple products. p

Quantitative investment managers tend to have smaller investment teams, allowing for lower costs to be passed on to clients. Additional savings come from not having to pay analysts to undertake fundamental research and in some cases, by controlling portfolio transactions. Quantitative investing lends itself to the development of simple and cost effective equity, interest-bearing and balanced products. These can be used on their own as stand-alone solution funds, or in combination with other funds to construct a well-diversified balanced

Eldria Fraser Chief Investment Officer Prescient Investment Management

March 2014 Pensions World

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G O V E R N A N C E A N D C O M P L I A N C E

Investment governance tips for retirement funds 22

March 2014 Pensions World

he savings industry is experiencing significant change driven by a much greater regulatory burden imposed by National Treasury and the Financial Services Board. For the retirement fund sector, this means much greater fiduciary responsibility placed on fund trustees, with far-reaching practical implications. There are increasing cases of trustees being sued for millions, in their personal capacity. This is a heavy burden to bear, especially as trustees are generally not professionals, nor are they generally paid for their services. Rather, they are often employee and employer representatives who have agreed to sit on retirement fund boards or have been nominated to do so, outside of the scope of their day jobs. Retirement funds, which comprise the largest part of the SA savings pool at nearly R2.5 trillion, are complex to manage and administer. Their main purpose is to provide adequate benefits for fund members at retirement. One of the most critical aspects therefore is the proper management of retirement funds’ investments. For trustees, this can be a daunting task. How are they to be certain they are making the right investment decisions so that their fund delivers adequate investment returns on the money invested? The answer lies in the concept of proper investment governance. In short, if trustees set up the correct investment framework and follow due and proper process, their chances of reaching the right outcome will increase substantially. Naturally, most trustees will need the assistance of competent advisers and/or service providers to guide them, but this does not absolve them from being held accountable. Good investment governance can be a nebulous concept. Governance is a term often used when referring to institutions. It refers to the way things are done, how resources are used, and how decisions are

Mark Lindhiem Head: Platform Services Investment Solutions

March 2014 Pensions World

arrived at. A strong board of trustees will understand it can’t necessarily control outcomes. However they can ensure the process followed, resources used and that all issues faced are respectively thorough, sound and well considered. Trustees will often be faced with uncertainty. However, as long as they set the proper decision-making framework in place, follow a considered process and arrive at their decisions sensibly, they should have nothing to fear. When dealing with fund investments, a trustee board should have at least the following five elements well covered:

Strategy and policy

G O V E R N A N C E A N D C O M P L I A N C E

An investment strategy/policy that is well thought through and clear, is a requirement legislated in terms of Regulation 28. Such strategy and policy will help guide the trustees in their decisionmaking and can provide a safety net when the need arises to consider investment decisions which are especially tricky. All regulatory and legislative requirements should be addressed in this strategy and policy document.

Framework Trustees should have a framework for overseeing the fund’s investments and the various processes they follow, including those required for decisionmaking. If due process is correctly followed, it may well safeguard the trustees if decisions they make do not turn out as expected.

Costs Retirement fund costs have been in the spotlight since the release of the National Treasury’s paper on “Charges in South African Retirement Funds”. While costs and charges can be debated, what should not be questioned is transparency. The days of hidden fees and charges are long gone and while some administrative complexities may be slowing down the process, service providers should be gearing up to be fully transparent. However, even when disclosed, the costs and charges retirement funds incur, especially on the investment front, can be complex and difficult to decipher. Nonetheless, it is a board’s responsibility to ensure that the types of costs and the amounts charged are visible. Costs affect the level of benefits paid and should be measureable.

G O V E R N A N C E A N D

Monitoring

Fidelity cover

This is one of a trustee board’s key roles. If proper monitoring is in place, it should, at worst, help ensure the trustees detect issues and problems early on or even before they arise. At best, monitoring ensures that a fund is well run and has the highest probability of meeting its goals and objectives over time.

Trustees must have adequate fidelity and indemnity cover that is current. All policy premiums must be paid and they should be clear regarding the scope of such cover.

All too often, this is one area where trustees come short. Their intention may be to fully monitor the fund’s investments, but in reality many aspects often go unmonitored, placing the fund at risk. Monitoring is about much more than assessing the fund’s investment performance.

C O M P L I A N C E

Regulation 28 compels each fund to undertake reasonable due diligence. This aspect of the legislation does not simply apply to ensuring decent investment returns. More importantly this must ensure that the fund’s assets are safeguarded in terms of where they are invested and in whose care they are entrusted. The entire process of managing the investments is critical. Some key elements to be considered are:

• Who is undertaking the valuation of the fund assets – is it an independent third party?

• Are the assets held in the name of the fund or the service provider?

• Is the custodian arrangement correctly set up to minimise credit risk?

• How are fund cash flows managed and are they optimised?

• What is the fund’s asset re-balancing policy?

• Is there adequate monitoring at investment manager level, and also at total fund level, to ensure the fund complies at all times with Regulation 28?

• Is attention paid to the assets invested offshore? Aspects such as legal structures, due diligence, monitoring, fees and disclosures must all be adequately covered by the trustees.

In conclusion Organisations seldom, if ever, admit to having poor governance. Many corporates and retirement funds which have produced impressive and comprehensive statements about proper governance have failed, because all that has been trumpeted has turned out to be fluff, lies and or fraud in the end. Good investment governance is not negotiable. It is very easy to pay lip service to this important concept but trustees and boards need to pay it more serious attention, to actually do it justice. There is a raft of new legislation hitting the industry, including the important Treating Customers Fairly (TCF) and Protection of Personal Information (POPI) laws. In this context, trustees will need to review whether their service providers are putting the right processes and resources in place to be compliant themselves and to assist the trustee boards in meeting their fiduciary obligations. p

March 2014 Pensions World

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G O V E R N A N C E A N D C O M P L I A N C E

Divorce and pension interest

ivorce is often a bitter and costly exercise. The last thing one wants is to go through the legal process only to be left with an unenforceable divorce order, in so far as it relates to the divorcing parties’ share in pension interest.

Recent Pension Fund Adjudicator decisions have once again highlighted the importance of ensuring that divorce settlement agreements and accompanying orders are drafted strictly in line with the Pension Funds Act 24 of 1956 (the “Pension Funds Act”), read together with the Divorce Act 70 of 1979 (the “Divorce Act”). The aim of section 37A of the Pension Funds Act is to protect a member’s pension benefits from their creditors. Therefore this provision expressly limits a fund’s ability to deduct amounts from a member’s pension interest. As a general rule, a fund may only make a deduction from a member’s benefit if such a deduction is allowed in terms of the Pension Funds Act, the Income Tax Act and the Maintenance Act. This general rule is however, subject to the

Lize de la Harpe Legal Adviser, Glacier by Sanlam

March 2014 Pensions World

exceptions set out in section 37D of the Pension Funds Act. One of these exceptions relates to divorce. Section 37D(1)(d)(i) states that a registered fund may deduct any amount assigned to a non-member spouse in terms of a divorce order granted in terms of section 7(8)(a) of the Divorce Act.

What must be reflected in the divorce order? When parties divorce, the court dissolving the marriage may make an order: (i) d i r e c t i n g t h e a p p l i c a b l e f u n d t o m a ke a n endorsement to its records regarding the nonmember spouse’s entitlement to a portion of a pension interest; and (ii) to pay such portion to the non-member spouse in accordance with their choice. All of this must be specifically claimed for in the summons (and accompanying settlement agreement, if applicable).

What requirements are stipulated in law? Section 7(8) of the Divorce Act, read together with section 37D(4)(a) of the Pension Funds Act, sets out certain conditions that a divorce order must comply with, in order for the fund concerned to be able to give effect to a non-member spouse’s claim. These conditions can be summarised as follows: • The order must specifically provide for the nonmember spouse’s entitlement to a “pension interest” as defined in the Divorce Act; • the order must set out a percentage (%) of the member ’s pension interest or a specific Rand amount; • the relevant fund required to deduct the pension interest must be named or be identifiable; and • the fund must be expressly ordered to endorse its records and make payment of the pension interest.

Recent Pension Fund Adjudicator Rulings Earlier this year, in the matter of Areias v Momentum Retirement Annuity Fund and another [2013] JOL 30007 (PFA), the Pension Funds Adjudicator had to consider whether a divorce order met the requirements as set out above. In this case the complainant wanted to rely on a

March 2014 Pensions World

divorce order which entitled her to 50% of her former husband’s pension interest. However, the order did not name the fund and it didn’t refer to “pension interest” as defined in the Divorce Act. The settlement agreement simply referred to “policies which shall continue to be paid by the member until maturity date when the policies will be paid out in equal shares”. The Adjudicator held that a court order is only binding on a particular fund if it mentions the fund by name, makes reference to “pension interest” and otherwise complies with the relevant sections of the Pension Funds Act and Divorce Act (as set out above). The complaint was therefore dismissed. In the recent matter of Bowyer v Personal Portfolio Preservation Fund the Adjudicator stated that the fund in question should not have complied with the divorce order because the order did not fulfil the requirements as set out above. This matter clearly shows the current Adjudicators’ tendency to insist on strict compliance with the requirements of the said legislation before giving effect to a divorce order, in terms of which pension interest is allocated to a non-member spouse.

In summary If a divorce order does not strictly meet the above conditions, it will not be in compliance with the Divorce Act read together with the Pension Funds Act and will therefore not be enforceable against the fund. The fund in question has no discretion in this regard, as it is strictly bound by the Pension Funds Act. Recent Adjudicator decisions in this regard (two of which are mentioned above) make it very clear that funds and administrators must act with extreme caution when receiving a request for a divorce order payment. They must always ensure that pension interest payments are made in terms of a court order which is legally valid as set out above. If a divorce order is found to be unenforceable against the fund in question, it does not mean that a non-member spouse loses their claim for the pension interest as awarded. The non-member spouse still has a claim, but will have to make a claim against their ex-spouse (the member spouse). The non-member spouse will therefore either have to go back to court to sue their ex-spouse for the value of the pension interest they are entitled to and hope he/she has the funds to make good the claim. Alternatively, the non-member spouse will have to approach the court that issued the divorce order and request an amendment in order to bring it in line with the provisions of the Divorce Act and the Pension Funds Act. Unfortunately, both options involve further legal costs. Even if the ex-spouse (member spouse) confirms that he/she has no problem with the deduction of the pension interest awarded, it will not affect the unenforceability of the order against the fund. p

G O V E R N A N C E A N D C O M P L I A N C E

L E G A L U P D A T E

Legal Update Protection of Personal Information (POPI) After many years of deliberation, the Protection of Personal Information Act (“POPI”) was finally signed into law on 26 November 2013. The Act affects most entities in the public and private sector and therefore its impact on businesses is significant. The President has not yet specified an effective date for POPI. It may be that the President specifies different effective dates for different parts of the Act. Once the Act (or a part of it) becomes effective, we will have one year to comply with it. POPI is aimed at protecting people’s personal information and will regulate all processing of personal information. Some important

Nancy Andrews Senior Legal and Tax Adviser Alexander Forbes Financial Services

March 2014 Pensions World

terminologies which one needs to bear in mind when looking at POPI are: • The responsible party is the person/organisation that is doing the processing of the personal information. • The data subject is the person whose information the responsible party is processing. • Personal information is a very wide concept and basically includes anything about a natural person (or sometimes others like a company or a fund) and it includes information about a person’s race, gender, marital status, ethnic or social origin, age, physical or mental health, language, religion, education, medical, financial, criminal or employment history, contact details, biometric information, personal opinions, views or preferences and confidential correspondence.

• Processing is very widely defined and includes the collection, collation, storage, use, erasure, destruction, alteration or distribution of a record which has personal information in it. Basically, anything that is done with personal information from the time it is incepted to the time it is destroyed is considered as “processing”. • Record is any form of recorded information, whether electronic, written, graphical or diagrammatic, eg electronic records, paper records, an x-ray or even a photo. POPI contains eight general protection principles as summarised below. It is important to know that while POPI sets out the principles, it also sets out circumstances when a responsible party does not have to comply with the principles (i.e. exceptions). The eight principles of POPI are as follows:

Accountability

The responsible party, such as a retirement a fund, is accountable for compliance under POPI

Processing limitation

The responsible party may only process personal information if the processing is adequate, relevant and not excessive, taking into account the purpose for processing

Purpose specification

The responsible party must collect personal information for a specific purpose and the data subject must be aware of that purpose

Further processing limitation

Responsible parties may only use personal information for another (“further”) purpose other than the original purpose, if that further purpose is compatible with the original purpose

Information quality

The responsible party must take reasonable steps to ensure the personal information is complete, accurate, not misleading and updated

Openness

The responsible party must take reasonable steps to notify the data subject of certain information, such as: • The information being collected • The purpose for which the information is collected • Whether the supply of information is voluntary or mandatory • The consequences of failure to provide information • Any particular law that applies, and • Whether there has been unauthorised accessing, processing, erasure or deletion of their personal information (the responsible party also has to notify the Information Regulator of this)

Security safeguards

The responsible party must have measures in place to protect the personal information collected and processed from damage, loss and unauthorised destruction, processing and access

Data subject participation

Data subjects can ask what personal information is held about them and can ask for access and changes to their personal information

March 2014 Pensions World

L E G A L U P D A T E

In addition to the eight protection principles, POPI also includes provisions and protections regarding the following subjects, among others: • Special personal information (this is personal information that is given special protection and includes health and criminal information) • Children’s personal information • Account numbers (such as bank account numbers) • Personal information leaving the country • Direct marketing by means of unsolicited electronic communication.

POPI in the retirement fund context Funds, insurers and fund service providers have access to individual data subject’s personal information, such as contact details, ID numbers, gender, marital status and medical information. They collect and use this information in order to provide the required service to members (and others). Fund trustees are accountable for a fund’s compliance under POPI. Trustees will have one year from the effective date to ensure that the fund complies with POPI.

formally appointed as the Pension Funds Adjudicator from 1 July 2013 until 1 July 2016. The focus of the Office of the Pension Funds Adjudicator (“OPFA”) over the reporting period was to continue carrying out the strategic objective of disposing of complaints in a procedurally fair, economical and speedy manner. This was achieved by reviewing the complaints management system, removing all duplications and automating certain administrative processes. Some relevant statistics: • Telephone enquiries: queries have increased from 17 143 in the last financial year to 17 853 in this financial year. The report states that even though the OPFA belongs to a centralised “Financial Ombud Schemes” telephone line, most calls are received directly and are not re-routed from the central telephone line. • Walk-in enquiries: queries have decreased from 3 894 in the last financial year to 1 386 in this financial year. Similar to the previous year, the most prevalent type of complaints received related to withdrawal benefits, followed by pension interest, death benefits, retirement benefits and other low volume complaints.

Pension Funds Adjudicator Annual Report

• New complaints: On 1 April 2012, the OPFA had 8 330 complaints open on their system but many of them had already been resolved. A total of 5 161 new complaints were received and 8 127 of all claims were resolved for the period under review.

The Annual Report (“the Report”) for the financial year end 2012/2013 was issued by the Pension Funds Adjudicator, Ms. M. Lukhaimane. Ms. Lukhaimane was

• It is clear from the report that the OPFA’s commitment and determination to resolve issues speedily has been a positive influence on the retirement fund industry. p

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March 2014 Pensions World

ACTUARIES & CONSULTANTS

Absa Consultants & Actuaries

We are one of the leading employee benefits service providers in South Africa and specialise in all aspects of employee benefits. While we treat each client as unique and special we differentiate ourselves from other service providers by providing excellent service to our clients through a decentralised consulting model. Fifth Floor, Absa Towers North, 180 Commissioner Street, Johannesburg, 2001 Tel: (011) 846 3542 Fax: 086 753 3430 Contact: Willem Welsch Email: willemw@absa.co.za acanewbusiness@absa.co.za Website: www.absa.co.za

Novare Actuaries and Consultants

Independent investment advisors providing investment consulting services to institutional clients throughout Southern Africa. Our implemented consulting solution provides clients with the benefit of world-class systems, coupled with a dedicated consulting service team to ensure access to and execution of innovative asset management and portfolio construction techniques and solutions. Novare is licensed as a 13B administrator in terms of the Pension Funds Act. It is also an authorised financial services provider of the Financial Services Board. Telephone: (021) 914 7730 Fax: (021) 914 7733 Postal address: P.O. Box 4742 Tyger Valley 7536 Website: www.novare.com Email: marina@novare.com

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Independent Actuaries & Consultants (Pty) Ltd

Do you need independent actuarial and investment advisory services that is understandable? We have a skilled, professional and experienced team who will provide value to your members and service satisfaction that will surpass your expectations. To find out more about the impartial, customised actuarial and investment advice that we can offer you, please send us an email or give us a call. Tel: +27 21 422 4373 / +27 11 656 4170 Email: info@iac.co.za CONTACTS: Cape Town: Asim Gani (MD) Email: asim@iac.co.za Gauteng: Krishen Sukdev Email: krishen.sukdev@iac.co.za Website: www.iac.co.za Linkedin: Independent Actuaries and Consultants By choosing to contact us you will automatically go into a draw to win 2 complimentary tickets to our next annual conference, all you need to do is quote this reference number: IACPW2014

S E R V I C E S D I R E C T O R Y

Simeka Consultants & Actuaries

Simeka Consultants & Actuaries is an independent actuarial and consulting firm. As a specialist consultancy, we have a focused approach to providing our clients with appropriate tailor made solutions for their employee benefit arrangements. Cape Town: Simeka House, The Vineyards Office Estate, 99 Jip de Jager Drive, Bellville, 7530 t. +27 (0) 21 912 3300 Durban: 1st Floor, Northwing, 2 Cranbrook Crescent, Douglas Saunders Drive, La Lucia Ridge, 4051 t. +27 (0) 31 566 2302 Pretoria: 3rd Floor, Podium at Menlyn, 43 Ingersol Road, Cnr Lois and Atterbury Road, Menlyn, 0181 t. +27 (0) 12 369 8800 Sandton: 4th Floor, Sandton City Office Towers, Cnr Rivonia Road and Fifth Street, Sandton, 2196 t. +27 (0) 11 263 4300

NMG Consultants and Actuaries Pty Ltd. – FSP12968

NMG Consultants and Actuaries (Pty) Ltd is an Authorised Financial Services Provider – FSP Licence No: 12968. 411 Main Avenue, Randburg Contact: Ms Jennifer Grefen, BCom CFP (Director of Retirement Funds) Tel: (011) 509 3036 Fax: (011) 886 3659 Email: jgrefen@nmg.co.za Website: www.nmg.co.za

ADMINISTRATION SERVICES

Email: info@simekaconsult.co.za Website: www.simekaconsult.co.za

Absa Consultants & Actuaries

Cadiant Partners Consultants & Actuaries A firm of independent professionals, advising on Retirement Benefits, Healthcare and Investments. Telephone: (011) 783 1620 Fax: (011) 783 1694

Fifth Floor, Absa Towers North, 180 Commissioner Street, Johannesburg, 2001 Tel: (011) 846 3542 Fax: 086 753 3430 Contact: Willem Welsch Email: willemw@absa.co.za acanewbusiness@absa.co.za Website: www.absa.co.za

Postal Address: Private Bag X24, Sandton 2146 Contact: Virgilio da Silva Email: virgiliod@cadiant.co.za

Robson Savage (Pty) Ltd C.A. Scott Consulting Actuary

Retirement fund valuations (defined benefit and defined contribution) and consulting advice, post-employment benefit (pension and medical) valuations for accounting purposes (IAS 19); financial software development. PO Box 1505, Randburg, 2125 Tel: (011) 787-4955 Fax: (011) 789-8566 Email: clientservice@cascott.co.za Websites: www.cascott.co.za / www.scottwingham.com

Glassock and Associates

NMG Consultants and Actuaries Administrators Pty Ltd. â&#x20AC;&#x201C; FSP33424 NMG Consultants and Actuaries Administrators (Pty) Ltd is an Authorised Financial Services Provider â&#x20AC;&#x201C; FSP Licence No: 33424.

Employee Benefit Consultants and Administrators, Independent Retirement Fund Administration and Consulting, Financial Planning, Healthcare. Authorised Financial Services Provider. FSP No. 5669 PO Box 72280, Parkview, 2122 Tel: (011) 771 2322 Fax: (011) 325 2434 Contact: Trevor Glassock Email: trevor@glassock.co.za Website: www.glassock.co.za

411 Main Avenue, Randburg Tel: (011) 509 3000 Fax: (011) 886 3659 Contact: Mr Rajen Pillay

ASSET CONSULTANTS

Email: rpillay@nmg.co.za Website: www.nmg.co.za

Moriting Wealth Managers (Pty) Ltd

Service excellence through people, processes and systems. PO Box 7972, Johannesburg, 2000 Tel: (011) 225 2480 Fax: 086 674 6044 Contact: Noxhanti Mshumpela Email: noxhanti@moriting.com Website: www.moriting.com

Independent Actuaries & Consultants (Pty) Ltd

Verso Financial Services (Pty) Ltd

Independent pension/retirement fund administrators and employee benefit consultants underpinned by integrity and transparency. PO Box 4300, Tygervalley, 7536 Tel: (021) 943 5300 Fax: (021) 917 4600 Email: edward@verso.co.za Website: www.verso.co.za

Glassock and Associates

S E R V I C E S D I R E C T O R Y

ASSET MANAGERS

Novare Actuaries and Consultants

Absa Asset Management

We provide a range of portfolio management services and products to institutional investors. Our clients include pension and provident funds, institutions, corporates, government structures, medical aids, trusts and collective investment schemes. We offer institutional investors pooled and segregated portfolios specialising in fixed interest, absolute return, balanced and equity mandates. PO Box 6115, Johannesburg, 2000 Tel: (021) 657 1232 Fax: (011) 480 5484 Contact person: Nadine Kennedy Johnston Email. Nadine.Johnston@abam.co.za Website: www.abam.co.za

Website: www.novare.com Email: marina@novare.com

Afena Capital PO Box 23883, Claremont, 7735

Cadiant Partners Consultants & Actuaries A firm of independent professionals, advising on Retirement Benefits, Healthcare and Investments.

Tel: (021) 657 6240 Fax: (021) 671 4658 Contact: Sinenhlanhla (Sne) Dlamini, Business Development Manager Email: info@afenacapital.com Website: www.afenacapital.com

Telephone: (011) 783 1620 Fax: (011) 783 1694 Postal Address: Private Bag X24, Sandton 2146 Contact: Virgilio da Silva Email: virgiliod@cadiant.co.za

Kagiso Asset Management is a specialist investment management firm that manages funds across the risk spectrum for sophisticated institutional and private investors. PO Box 1016, Cape Town, 8000 Tel: (021) 673 6300 Fax: 086 675 8501 Contact: Roland Greaver Email: rgreaver@kagisoam.com Website: www.kagisoam.com

Prescient Investment Management (Pty) Ltd FedGroup Asset Managers (Pty) Ltd

FedGroup’s fresh approach to asset management ensures that investment portfolios are built around a client’s objectives. Our investment philosophy is designed around tools that allow clients to effectively articulate their investment return, risk and term objectives and in doing so, understand the consequences and interactions of these factors in their decision making. We utilise a “best of breed” technique which is built upon a solid foundation of rigorous risk management. FedGroup Asset Manager is an authorised Financial Services Provider. Gauteng 89 Bute Lane, Sandown, Sandton PO Box 782823, Sandton, 2146 Tel: (011) 305 2300 • Fax: (011) 305 2500 Western Cape 3rd Floor Mettle Building, Willie van Schoor Ave, Bellville Tel: (021) 949 2100 • Fax: (021) 949 2107 KwaZulu-Natal 71 Hunt Road, Musgrave Tel: (031) 202 1903 • Fax: (031) 202 1874 Eastern Cape 65 Pickering Street, Newton Park Tel: (041) 365 6525 • Fax: (041) 365 6229 E-mail: info@fedgroup.co.za Web: www.fedgroup.co.za

Momentum Asset Management (Pty) Ltd Momentum Asset Management, a wholly-owned subsidiary of MMI Holdings Limited, is a specialist asset manager with offerings in equity, fixed-income and multi-asset class portfolios. Its investment capabilities are focused within five key areas, namely Core Strategies, Fixed-income Strategies, Unconstrained Strategies, Frontier Strategies and Beta Strategies, allowing for specialisation and focused teams that cater to varied client requirements and expectations. Contact: Willem Gaymans Tel: +27 11 505 1075 Email: am.info@momentum.co.za www.momentum.co.za

Leading independent quantitative investment manager. Our core investment philosophy is directed around capital preservation and the management of downside risk. Our objective is to perform in line with the relevant benchmarks on the upside, while focusing on strategies to protect the fund against downside volatility i.e. limiting the losses that any downward movements in the market may have on the portfolio. Contact Person: Sharon Bailey P O Box 31142, Tokai, 7966 Cape Town Tel: +27 21 700 3600 Fax: +27 21 700 3700 Email: info@prescient.co.za Johannesburg Tel: +27 11 775 2100 Fax: +27 11 775 2150 Email: info@prescient.co.za Durban Tel: +21 31 536 8181 Fax: +27 31 536 8100 Email: info@prescient.co.za Website: www.prescient.co.za

SEI Investments (South Africa) Ltd

SEI is proud to have been providing comprehensive and innovative global investment solutions to South Africa since 1996. As one of the first offshore asset management firms to open an office in South Africa, we have a long history of commitment to the country. Telephone: +27 11 994 4207 Fax: +27 11 388 4073 Address: 3 Melrose Boulevard, 1st Floor, Melrose Arch, Johannesburg, South Africa Contact: Henry Tucker Email: hstucker@seic.com Website: www.seic.com/SouthAfrica

S E R V I C E S D I R E C T O R Y

BENEFICIARY FUNDS

Absa Trust

Absa Trust is a wholly owned subsidiary of the Absa Group and has been in existence for over 100 years. We are known for our innovation and service to both the trustees of funds and the guardians of beneficiaries in the previous Umbrella Trusts and our Absa Trust Beneficiary Fund. Our Beneficiary Fund and Employee Benefit Trusts ensure that dependants receive optimal benefits from the proceeds of death benefits. PO Box 7735, Johannesburg, 2000 Tel: (011) 846 5015 Cell: 082 4577 331 Fax: 086 7532871 Contact: Cathy McClune Email: cathymc@absa.co.za or beneficiaryfund@absa.co.za Website: www.absa.co.za

FedGroup Trust Administrators (Pty) Ltd As the simpler, cheaper option, FedGroup’s Beneficiary Care is the market leader within the Beneficiary Fund industry. Our value proposition resides in the investment that we make in our Beneficiaries. This investment is evident in our product offering, transparent fee structure, an average experience of 10 years within our administration team and the involvement of our Trustees. Our fresh approach, which includes a one page application form and no dissolution fees, sets us apart from other Beneficiary Fund providers. FedGroup Trust Administrators is an authorised Financial Services Provider. Gauteng 89 Bute Lane, Sandown, Sandton PO Box 782823, Sandton, 2146 Tel: (011) 305 2300 • Fax: (011) 305 2500 Western Cape 3rd Floor Mettle Building, Willie van Schoor Ave, Bellville Tel: (021) 949 2100 • Fax: (021) 949 2107 KwaZulu-Natal 71 Hunt Road, Musgrave Tel: (031) 202 1903 • Fax: (031) 202 1874

Fairheads Benefit Services (Pty) Ltd

Fairheads Benefit Services (Pty) Ltd is Southern Africa’s leading independent administrator of beneficiary funds and umbrella trusts. Fairheads Benefit Services is licensed as a 13B administrator in terms of the Pension Funds Act, and an authorised financial services provider of the Financial Services Board. Telephone (011 883 9755 Fax (011) 883 4791 Postal address: P O Box 781066, Sandton, 2146 Contact: Giselle Gould E-mail: giselle@fairheads.com Website: www.fairheads.com

At Sanlam Trust , we believe in building long-term relationships with our clients, as well as service with a strong, personal touch. Our vision is to be experienced by clients of all generations as the leading company in the protection and transfer of wealth. PO Box 1260, Sanlamhof, 7532 Tel: (021) 947 8740 Fax: (021) 957 1008 Contact: Ansie Wessels E-mail: ansie.wessels@sanlam.co.za Website: sanlamtrust@sanlam.co.za

Eastern Cape 65 Pickering Street, Newton Park Tel: (041) 365 6525 • Fax: (041) 365 6229 E-mail: info@fedgroup.co.za Web: www.fedgroup.co.za

COMMUNICATIONS

Absa Consultants & Actuaries

Sash Consulting (Pty) Ltd

We are the largest independent specialist fund communication company in South Africa; working nationally with Funds on all aspects of communication. Tel: Head Office: (021) 943 5303 Fax: (021) 917 4116 PO Box 4739, Tygervalley, 7536 Contact Person: Mrs Cathy Vorster Email: Cathyv@sash.co.za Website: www.sash.co.za

DISPOSAL OF DEATH BENEFITS Absa Trust

EMPLOYEE BENEFIT CONSULTANTS Glassock and Associates

Cadiant Partners Consultants & Actuaries A firm of independent professionals, advising on Retirement Benefits, Healthcare and Investments. Telephone: (011) 783 1620 Fax: (011) 783 1694 Postal Address: Private Bag X24, Sandton 2146 Contact: Virgilio da Silva Email: virgiliod@cadiant.co.za

S E R V I C E S D I R E C T O R Y

Simeka Consultants & Actuaries Consolidated Employee Benefits (Pty) Ltd

Independent specialist retirement fund consultants – expertise across a broad spectrum of employee benefit issues. Tel: (011) 329 6026 Fax: (011) 329 6288 Postal address: PO Box 1734, Randburg, 2125 Contact: Nigel Willmott Email: nigel.willmott@consolidated.co.za Website: www.consolidated.co.za

With employee benefit consulting at the heart of our business, Simeka Consultants & Actuaries is able to assist trustees, employers and unions to select an appropriately packaged retirement fund arrangement and to provide on-going tailor made advice to the management of the fund and to the funds members. Cape Town: Simeka House, The Vineyards Office Estate, 99 Jip de Jager Drive, Bellville, 7530 t. +27 (0) 21 912 3300 Durban: 1st Floor, Northwing, 2 Cranbrook Crescent, Douglas Saunders Drive, La Lucia Ridge, 4051 t. +27 (0) 31 566 2302 Pretoria: 3rd Floor, Podium at Menlyn, 43 Ingersol Road, Cnr Lois and Atterbury Road, Menlyn, 0181 t. +27 (0) 12 369 8800 Sandton: 4th Floor, Sandton City Office Towers, Cnr Rivonia Road and Fifth Street, Sandton, 2196 t. +27 (0) 11 263 4300 Email: info@simekaconsult.co.za Website: www.simekaconsult.co.za

Moriting Wealth Managers (Pty) Ltd

Robson Savage (Pty) Ltd

NMG Consultants and Actuaries Pty Ltd. – FSP12968

Verso Financial Services (Pty) Ltd

Independent pension/retirement fund administrators and employee benefit consultants underpinned by integrity and transparency.

Tel: (011) 509 3036 Fax: (011) 886 3659

PO Box 4300, Tygervalley, 7536 Tel: (021) 943 5300 Fax: (021) 917 4600

Email: jgrefen@nmg.co.za Website: www.nmg.co.za

Email: edward@verso.co.za Website: www.verso.co.za

EMPOWERMENT

Independent Actuaries & Consultants (Pty) Ltd

FINANCIAL PLANNING

Tennant Benefit Consultants (Pty) Ltd

Tennant offers a unique and personal service in nurturing and maximizing clientsâ&#x20AC;&#x2122; wealth, employee benefits and human resources. We achieve this through our commitment to professionalism, our multi-disciplined personnel and our application of cutting edge technology. Tennant is a member company of FedGroup and is an authorised financial services company. 89 Bute Lane, Sandown, Sandton PO Box 782823, Sandton, 2146 Tel: (011) 305 2350 Fax: (011) 305 2550 E-mail: info@tennant.co.za Web: www.tennant.co.za

Gauteng: Krishen Sukdev Email: krishen.sukdev@iac.co.za Website: www.iac.co.za Linkedin: Independent Actuaries and Consultants By choosing to contact us you will automatically go into a draw to win 2 complimentary tickets to our next annual conference, all you need to do is quote this reference number: IACPW2014

Glassock and Associates

EXTERNAL AUDITORS

Investment Management Services cc

KPMG

PO Box 571, Bedfordview, 2008 Tel: (011) 455 5810 Fax: (011) 455 4198

Cape Town PO Box 4609, Cape Town, 8000 Tel: (021) 408 7000 Fax: 0100017569 Website: www.kpmg.com Contact: Tareq Carrim Email: tareq.carrim@kpmg.co.za Tel: +27 83 255 3777 Johannesburg KPMG Crescent 85 Empire Road, Parktown, 2193 Contact: Wayne Pretorius Email: wayne.pretorius@kpmg.co.za Tel: +27 82 715 5912 Contact: Marcelle Fouche Email: marcelle.fouche@kpmg.co.za Tel: +27 82 788 9111

Wealth management for retirees and pre-retirees.

Email: bgoodall@imscc.co.za Website: www.imscc.co.za

HEALTHCARE Glassock and Associates

S E R V I C E S D I R E C T O R Y

Novare Actuaries and Consultants

NMG Consultants and Actuaries Pty Ltd. – FSP12968

NMG Consultants and Actuaries (Pty) Ltd is an Authorised Financial Services Provider – FSP Licence No: 12968. 411 Main Avenue, Randburg Contact: Mrs Toska Kouskos, National Director, Health Care Tel: (011) 509 3161 Email: tkouskos@nmg.co.za Website: www.nmg.co.za

INDEPENDENT CONSULTANTS

Consolidated Employee Benefits (Pty) Ltd

Independent specialist retirement fund consultants – expertise across a broad spectrum of employee benefit issues. Tel: (011) 329 6026 Fax: (011) 329 6288

RisCura

RisCura is a global, independent financial analytics provider and investment consultant. RisCura services institutional investors with over $200billion in assets under management, as well as a significant number of asset management, hedge fund and private equity firms. RisCura is a leading provider of independent valuation, risk and performance analysis services to investors. The RisCura Group comprises four independent business units - RisCura Analytics, RisCura Consulting, RisCura Fundamentals and RisCura Fund Services. These units ensure that we provide essential investment decision support to our clients. Cape Town: 5th Floor, Montclare Place, cnr Campground & Main Road, Claremont, 7735 PO Box 23983, Claremont, 7735 Tel: +27 21 673 6999 Fax: +27 21 673 6998 Johannesburg: 3 Melrose Boulevard, Melrose Arch, 2076 Postnet Suite 116, Private Bag X, Melrose Arch, 2076 Tel: +27 11 214 9800 Fax: +27 11 214 9801

Contact: Nigel Willmott

Windhoek: 2nd Floor, Heritage Square, cnr Lindequist St & Robert Mugabe Ave, Windhoek, Namibia PO Box 27449, Windhoek, Namibia Tel: +264 61 410 350 Fax: +264 61 228 558

Email: nigel.willmott@consolidated.co.za Website: www.consolidated.co.za

Email address: info@riscura.com Website address: www.riscura.com

Postal address: PO Box 1734, Randburg, 2125

Glassock and Associates

Cadiant Partners Consultants & Actuaries

A firm of independent professionals, advising on Retirement Benefits, Healthcare and Investments. Telephone: (011) 783 1620 Fax: (011) 783 1694

INDEPENDENT INTERNAL AUDITORS

Postal Address: Private Bag X24, Sandton 2146 Contact: Virgilio da Silva Email: virgiliod@cadiant.co.za

i-Value Sound internal control- and risk management practices forms the foundation of governance of Retirement Funds. i-Value is a professional services company that assists Trustees and Administrators to be informed on the relevant internal control- and risk management environment.

NMG Consultants and Actuaries Pty Ltd. – FSP12968

i-Value has knowledge in the areas of: •

Management Information;

NMG Consultants and Actuaries (Pty) Ltd is an Authorised Financial Services Provider – FSP Licence No: 12968.

•

Trustee Reporting;

•

Governance processes, including Risk Management;

411 Main Avenue, Randburg

•

Member Administration;

•

Investment Administration;

•

Fund Accounting;

•

Information Technology General Controls;

•

Process enhancements.

Contact: Ms Jennifer Grefen, BCom CFP (Director of Retirement Funds) Tel: (011) 509 3036 Fax: (011) 886 3659 Email: jgrefen@nmg.co.za Website: www.nmg.co.za

Our services are relevant to both Administrators and Trustees of Umbrella – and Free Standing Funds. National Contact: Michael van der Westhuizen, CA (SA) Tel: 012 345 2502 / 083 384 7334 Email: Michael@i-value.co.za Web: www.i-value.co.za

Verso Financial Services (Pty) Ltd

INVESTMENT CONSULTING SERVICES Investment Management Services cc Wealth management for retirees and pre-retirees. PO Box 571, Bedfordview, 2008 Tel: (011) 455 5810 Fax: (011) 455 4198 Email: bgoodall@imscc.co.za Website: www.imscc.co.za

S E R V I C E S D I R E C T O R Y

INVESTMENT CONSULTING SERVICES

GraySwan is a trusted company and unique by way of providing truly independent investment consulting services. We advise to more than R25 billion in retirement assets with more than 45 000 investors benefitting from our objective and non-conflicted advice. Our clients range from R10 million to R15 billion in size. We offer a comprehensive range of services: Investment Audit, Investment Strategy, Manager Selection, Portfolio Construction, Investment Implementation, Risk Management, Performance and Risk Monitoring and Trustee Training. We have offices in Johannesburg and Somerset West. Contact: David Maetla

Tel: 011 912 7722 Cell: 083 548 1267 david@grayswan.co.za

Duncan Theron Tel: 021 852 9092 Cell: 082 336 8615 duncan@grayswan.co.za

Website: www.grayswan.co.za FSP no: 42290

Independent Actuaries & Consultants (Pty) Ltd

Simeka Consultants & Actuaries

Simeka Consultants & Actuariesâ&#x20AC;&#x2122; investment consulting team combines experience gained in financial markets and actuarial science to formulate best advice and bespoke solutions. This is supported by our vision of a life journey partnership for retirement savings, which is best reflected in our house view Lifestage investment product.

Novare Actuaries and Consultants

Cape Town: Simeka House, The Vineyards Office Estate, 99 Jip de Jager Drive, Bellville, 7530 t. +27 (0) 21 912 3300 Durban: 1st Floor, Northwing, 2 Cranbrook Crescent, Douglas Saunders Drive, La Lucia Ridge, 4051 t. +27 (0) 31 566 2302 Pretoria: 3rd Floor, Podium at Menlyn, 43 Ingersol Road, Cnr Lois and Atterbury Road, Menlyn, 0181 t. +27 (0) 12 369 8800 Sandton: 4th Floor, Sandton City Office Towers, Cnr Rivonia Road and Fifth Street, Sandton, 2196 t. +27 (0) 11 263 4300 Email: info@simekaconsult.co.za Website: www.simekaconsult.co.za

S E R V I C E S

RisCura

RisCura Consulting provides investment advisory services to some of the largest institutional asset owners in Africa and globally. RisCura’s industry leading and effective liability-driven investment approach has become synonymous with our brand. Our excellent track record of adding value to clients’ portfolios is supported by strong manager selection skills and an in-depth understanding of the market’s decision frameworks. RisCura Fund Services provides a seamless pricing and reporting service tailored to the needs of institutional investors. Our services are efficiently delivered to both large and small clients in any geographic and legal jurisdiction, and allow our clients to comply with global best practise in service delivery to their members. Cape Town: 5th Floor, Montclare Place, cnr Campground & Main Road, Claremont, 7735 PO Box 23983, Claremont, 7735 Tel: +27 21 673 6999 Fax: +27 21 673 6998 Johannesburg: 3 Melrose Boulevard, Melrose Arch, 2076 Postnet Suite 116, Private Bag X, Melrose Arch, 2076 Tel: +27 11 214 9800 Fax: +27 11 214 9801 Windhoek: 2nd Floor, Heritage Square, cnr Lindequist St & Robert Mugabe Ave, Windhoek, Namibia PO Box 27449, Windhoek, Namibia Tel: +264 61 410 350 Fax: +264 61 228 558 Email address: info@riscura.com Website address: www.riscura.com

FedGroup Participation Bond Managers (Pty) Ltd

Investing should be simple. FedGroup’s Participation Bond offering is as simple as it gets. A Participation Bond provides an Investor with the certainty of capital preservation, coupled with a consistency of interest. Feeding a conservative appetite, Participation Bonds are popular with individuals of all ages, Pension Funds, Retirees, Fund Managers, Trusts, Charities and Schools. The FedGroup Part Bond Fund holds a portfolio of first mortgage bonds over South African commercial, industrial and retail properties. Participation Bonds are regulated under the Collective Investment Schemes Act. Gauteng 89 Bute Lane, Sandown, Sandton PO Box 782823, Sandton, 2146 Tel: (011) 305 2300 • Fax: (011) 305 2500 Western Cape 3rd Floor Mettle Building, Willie van Schoor Ave, Bellville Tel: (021) 949 2100 • Fax: (021) 949 2107 KwaZulu-Natal 71 Hunt Road, Musgrave Tel: (031) 202 1903 • Fax: (031) 202 1874 Eastern Cape 65 Pickering Street, Newton Park Tel: (041) 365 6525 • Fax: (041) 365 6229 E-mail: info@fedgroup.co.za Web: www.fedgroup.co.za

INVESTMENT PRODUCT SOLUTIONS

Novare Equity Partners

Private equity fund manager, focusing on investment opportunities in sub-Saharan Africa, excluding South Africa, with specific focus on the property sector. Novare has built an extensive network and gained valuable experience and insight into investing on the African continent. Novare is licensed as a 13B administrator in terms of the Pension Funds Act. It is also an authorised financial services provider of the Financial Services Board. Telephone: (021) 914 7730 Fax: (021) 914 7733 Postal address: P.O. Box 4742 Tyger Valley 7536 Email: marina@novare.com Website: www.novareequitypartners.com

Novare Investments

Independent, multi-asset, multi-manager providing investment solutions in both the institutional and retail environment. We are ideally positioned to provide a range of services on a preferred partner basis. Novare is licensed as a 13B administrator in terms of the Pension Funds Act. It is also an authorised financial services provider of the Financial Services Board. Telephone: (021) 914 7730 Fax: (021) 914 7733 Postal address: P.O. Box 4742 Tyger Valley 7536 Email: marina@novare.com Website: www.novareinvestments.com

D I R E C T O R Y

S E R V I C E S

INVESTMENT TRUSTEES SERVICES

D I R E C T O R Y

LIABILITY DRIVEN INVESTMENT

Colourfield Liability Solutions (Pty) Ltd Colourfield Liability Solutions is South Africaâ&#x20AC;&#x2122;s first and only dedicated liability driven investment boutique. Our unique blend of actuarial rigour, investment management and derivative structuring expertise delivers real financial benefits to pension funds and their members. Our approach is scientific, cost effective and efficient and our track record in managing liabilities is demonstrable.

LEGAL AND CORPORATE ADVISORY SERVICES

Contact Costa Economou T +27 (0) 861 007 656 F +27 (0) 86 579 8592 costa@colourfield.co.za www.colourfield.co.za Unit 16b 3rd Floor 3 Melrose Boulevard Melrose Arch Johannesburg 2076

Colourfield is an Authorised Financial Services Provider, FSP 35113

Bowman Gilfillan

Bowman Gilfillan provides legal services to pension funds and employers in all aspects of pension funds, service providers and employers.

MULTI -MANAGERS

165 West Street, Sandton, 2146 Tel: +27 11 669 9000 Fax: +27 11 669 9001 Email: info@bowman.co.za Website: www.bowman.co.za Branch: Cape Town 22 Bree Street, Cape Town, 8000 Tel: +27 21 480 7800

Alusi Management Company (Alusi)

Alusi is a boutique multi-asset, multi-council asset manager. Our portfolios reflect high-conviction views on previously disenfranchised individuals or highly specialised skill sets from the hedge fund universe, with the aim to grow tomorrowâ&#x20AC;&#x2122;s new market leaders. PO Box 4188, Tyger Valley, 7536 Tel: +27 21 970 2612 Fax: +27 86 584 4895 Contact: Hayley Richards, Business Co-ordinator Email: hayley.richards@alusi.co.za Website: www.alusi.co.za

Novare Investments

NMG Consultants and Actuaries Pty Ltd. – FSP12968

NMG Consultants and Actuaries (Pty) Ltd is an Authorised Financial Services Provider – FSP Licence No: 12968. 411 Main Avenue, Randburg Contact: Mr Rajen Pillay Tel: (011) 509 3036 Fax: (011) 781 1619 Email: rpillay@nmg.co.za Website: www.nmg.co.za

Email: marina@novare.com Website: www.novareinvestments.com

Edge Capital (Pty) Ltd

Edge Capital’s funds cover the full spectrum of fixed interest, equity centric and risk-profiled multi-strategy fund of hedge funds. PO Box 4188, Tyger Valley, 7536 Tel: +27 21 976 1012 Fax: +27 21 976 1096 Contact: Pieter Davis, Head of Business Strategy

Moriting Wealth Managers (Pty) Ltd

Email: pdavis@edge.co.za Website: www.edge.co.za

PENSION FUND ADMINISTRATION Verso Financial Services (Pty) Ltd Glassock and Associates

S E R V I C E S D I R E C T O R Y

PENSION FUND CONSULTING

Glassock and Associates

Verso Financial Services (Pty) Ltd

Consolidated Employee Benefits (Pty) Ltd

PRE-RETIREMENT COUNSELLING Glassock and Associates

Investment Management Services cc Wealth management for retirees and pre-retirees.

NMG Consultants and Actuaries Pty Ltd. – FSP12968

NMG Consultants and Actuaries (Pty) Ltd is an Authorised Financial Services Provider – FSP Licence No: 12968. 411 Main Avenue, Randburg Contact: Ms Jennifer Grefen, BCom CFP (Director of Retirement Funds) Tel: (011) 509 3096 Fax: (011) 886 3659 Email: jgrefen@nmg.co.za Website: www.nmg.co.za

PO Box 571, Bedfordview, 2008 Tel: (011) 455 5810 Fax: (011) 455 4198 Email: bgoodall@imscc.co.za Website: www.imscc.co.za

RETIREMENT FUND ADMINISTRATION

Glassock and Associates

FedGroup Fund Administrators (Pty) Ltd

For the employer who prefers to have a customised Retirement Fund arrangement, FedGroup Fund Administrators offer Stand-alone Retirement Fund administration services. Each Stand-alone fund is designed according to your specific needs in terms of; contribution rates, risk benefits and investment options. Our administrative team has both fund administration as well as financial expertise which ensures the smooth administration of your Retirement fund.

Moriting Wealth Managers (Pty) Ltd

Service excellence through people, processes and systems. PO Box 7972, Johannesburg, 2000

Gauteng 89 Bute Lane, Sandown, Sandton PO Box 782823, Sandton, 2146 Tel: (011) 305 2300 • Fax: (011) 305 2500

Tel: (011) 225 2480 Fax: 086 674 6044

Western Cape 3rd Floor Mettle Building, Willie van Schoor Ave, Bellville Tel: (021) 949 2100 • Fax: (021) 949 2107

Email: noxhanti@moriting.com Website: www.moriting.com

Contact: Noxhanti Mshumpela

KwaZulu-Natal 71 Hunt Road, Musgrave Tel: (031) 202 1903 • Fax: (031) 202 1874 Eastern Cape 65 Pickering Street, Newton Park Tel: (041) 365 6525 • Fax: (041) 365 6229 E-mail: info@fedgroup.co.za Web: www.fedgroup.co.za

Verso Financial Services (Pty) Ltd

NMG Consultants and Actuaries Pty Ltd. – FSP12968

Robson Savage (Pty) Ltd

S E R V I C E S D I R E C T O R Y

RETIREMENT FUND MANAGEMENT

Verso Financial Services (Pty) Ltd

Independent pension/retirement fund administrators and employee benefit consultants underpinned by integrity and transparency.

Moriting Wealth Managers (Pty) Ltd

Service excellence through people, processes and systems. PO Box 7972, Johannesburg, 2000 Tel: (011) 225 2480 Fax: 086 674 6044

PO Box 4300, Tygervalley, 7536 Tel: (021) 943 5300 Fax: (021) 917 4600 Email: edward@verso.co.za Website: www.verso.co.za

Contact: Noxhanti Mshumpela Email: noxhanti@moriting.com Website: www.moriting.com

RISK MANAGEMENT Simeka Consultants & Actuaries

With employee benefit consulting at the heart of our business, Simeka Consultants & Actuaries is able to assist trustees, employers and unions to select an appropriately packaged retirement fund arrangement and to provide on-going tailor made advice to the management of retirement funds and to the funds members to allow them financial stability at retirement. Cape Town: Simeka House, The Vineyards Office Estate, 99 Jip de Jager Drive, Bellville, 7530 t. +27 (0) 21 912 3300 Durban: 1st Floor, Northwing, 2 Cranbrook Crescent, Douglas Saunders Drive, La Lucia Ridge, 4051 t. +27 (0) 31 566 2302 Pretoria: 3rd Floor, Podium at Menlyn, 43 Ingersol Road, Cnr Lois and Atterbury Road, Menlyn, 0181 t. +27 (0) 12 369 8800 Sandton: 4th Floor, Sandton City Office Towers, Cnr Rivonia Road and Fifth Street, Sandton, 2196 t. +27 (0) 11 263 4300 Email: info@simekaconsult.co.za Website: www.simekaconsult.co.za

RisCura

RisCura Analytics is Africaâ&#x20AC;&#x2122;s leading independent provider of innovative analytical investment services for the financial and investment industry. We offer six major services: risk, performance, compliance, quants, indexation and data services. Since 2002, RisCura Analytics has been supported by a competent staff contingent, solid processes and robust technology so our clients can be confident that they are getting the best service the industry has to offer. Cape Town: 5th Floor, Montclare Place, cnr Campground & Main Road, Claremont, 7735 PO Box 23983, Claremont, 7735 Tel: +27 21 673 6999 Fax: +27 21 673 6998 Johannesburg: 3 Melrose Boulevard, Melrose Arch, 2076 Postnet Suite 116, Private Bag X, Melrose Arch, 2076 Tel: +27 11 214 9800 Fax: +27 11 214 9801 Windhoek: 2nd Floor, Heritage Square, cnr Lindequist St & Robert Mugabe Ave, Windhoek, Namibia PO Box 27449, Windhoek, Namibia Tel: +264 61 410 350 Fax: +264 61 228 558 Email address: info@riscura.com Website address: www.riscura.com

SOFTWARE & SERVICES FOR THE RETIREMENT FUND INDUSTRY IMX Software SA

Specialist in systems for retirement fund and medical aid administration. PO Box 4656, Rivonia, 2128 Telephone: (011) 706 2930 Fax: (011) 706 2991 Email: rstansell@imxsoftware.com Website: www.imxsoftware.co.za

TRACING SERVICES

Simeka Consultants & Actuaries

Simeka Consultants & Actuaries offers (NQF accredited) trustee training on general governance, investments and the allocation of death benefits. Their member education and support services create awareness, while informing and empowering members to follow an optimal, cost effective retirement strategy. Cape Town: Simeka House, The Vineyards Office Estate, 99 Jip de Jager Drive, Bellville, 7530 t. +27 (0) 21 912 3300 Durban: 1st Floor, Northwing, 2 Cranbrook Crescent, Douglas Saunders Drive, La Lucia Ridge, 4051 t. +27 (0) 31 566 2302 Pretoria: 3rd Floor, Podium at Menlyn, 43 Ingersol Road, Cnr Lois and Atterbury Road, Menlyn, 0181 t. +27 (0) 12 369 8800 Sandton: 4th Floor, Sandton City Office Towers, Cnr Rivonia Road and Fifth Street, Sandton, 2196 t. +27 (0) 11 263 4300 Email: info@simekaconsult.co.za Website: www.simekaconsult.co.za

UMBRELLA FUNDS Glassock and Associates

TRAINING AND EDUCATION

Verso Financial Services (Pty) Ltd

The Verso Umbrella Retirement Pension Fund and the Verso Umbrella Retirement Provident Fund are the ideal independent and cost effective retirement solution that is professionally managed and administered. It is the obvious choice. PO Box 4300, Tygervalley, 7536 Tel: (021) 943 5300 Fax: (021) 917 4600 Email: edward@verso.co.za Website: www.verso.co.za

S E R V I C E S D I R E C T O R Y

UMBRELLA TRUSTS

S E R V I C E S D I R E C T O R Y

Fairheads Benefit Services (Pty) Ltd FedGroup Distinction Umbrella

Establishing retirement savings should involve a joint effort between an employer and employee. Our Distinction Umbrella is a cost effective vehicle that supports this joint effort. FedGroup’s Distinction Umbrella Funds provide for the Retirement and Group Risk benefit needs of employees of smaller companies. Benefits like; a free will service, home loan application, member internet access and Education Trust Cover gives us a fresh approach and sets us apart from other providers. The FedGroup Distinction Pension and Provident Umbrella Funds are defined contribution Retirement Funds that are registered with the Registrar of Pension Funds and approved by The Commissioner of Inland Revenue.

Gauteng 89 Bute Lane, Sandown, Sandton PO Box 782823, Sandton, 2146 Tel: (011) 305 2300 • Fax: (011) 305 2500 Western Cape 3rd Floor Mettle Building, Willie van Schoor Ave, Bellville Tel: (021) 949 2100 • Fax: (021) 949 2107 KwaZulu-Natal 71 Hunt Road, Musgrave Tel: (031) 202 1903 • Fax: (031) 202 1874 Eastern Cape 65 Pickering Street, Newton Park Tel: (041) 365 6525 • Fax: (041) 365 6229 E-mail: info@fedgroup.co.za Web: www.fedgroup.co.za

FedGroup Trust Administrators (Pty) Ltd FedGroup Trust Administrators offer a simple range of products that care for minor Beneficiaries on the death of a Retirement Fund member. As the simpler, cheaper option, FedGroup’s Beneficiary Care is the market leader within the industry. Our Beneficiary Care consists of approved death benefits, Beneficiary Funds as well as unapproved benefits in the form of Beneficiary Trusts. FedGroup Trust Administrators is an authorised Financial Services Provider.

Moriting Wealth Managers (Pty) Ltd

Verso Financial Services (Pty) Ltd

The Verso Unclaimed Benefit Pension and Provident Preservation Funds are the ideal independent and cost effective solution that professionally and actively manages unclaimed benefits on behalf of funds in accordance with new legislation. It is the obvious choice. PO Box 4300, Tygervalley, 7536 Tel: (021) 943 5300 Fax: (021) 917 4600 Email: edward@verso.co.za Website: www.verso.co.za

WEB BASED SERVICES UNCLAIMED BENEFITS

FedGroup offers both a Pension and Provident unclaimed Benefit Preservation Fund. These Funds provide a cost effective solution with independent governance structures to protect unclaimed benefits. FedGroup is an authorised Financial Services Provider. Gauteng 89 Bute Lane, Sandown, Sandton PO Box 782823, Sandton, 2146 Tel: (011) 305 2300 Fax: (011) 305 2500 Western Cape 3rd Floor Mettle Building, Willie van Schoor Ave, Bellville Tel: (021) 949 2100 Fax: (021) 949 2107 KwaZulu-Natal 71 Hunt Road, Musgrave Tel: (031) 202 1903 Fax: (031) 202 1874 Eastern Cape 65 Pickering Street, Newton Park Tel: (041) 365 6525 Fax: (041) 365 6229 E-mail: info@fedgroup.co.za Web: www.fedgroup.co.za

S E R V I C E S D I R E C T O R Y

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