ROAD FREIGHT AND LOGISTICS INDUSTRY PROVIDENT FUND. Feedback to Gauteng Regional Conference By: Es:e van Coller On behalf of: Joe Letswalo

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1 ROAD FREIGHT AND LOGISTICS INDUSTRY PROVIDENT FUND Feedback to Gauteng Regional Conference By: Es:e van Coller On behalf of: Joe Letswalo

2 Good News Fund has allocated 20% in bonuses over the last few years (16.4% 2011 & 5% 2012). Funeral benefits were improved from R to R without any premium increase. Housing loan facility (pension- backed loan) was added in 2013 through FNB. Sanlam was appointed as Front Office administrator and has Call Centre and na:onal walk- in centres to handle member queries.

3 Data Reconstruc:on The data reconstruc:on was completed by SALT EB and approved by the Board of Trustees. A final Reconstruc:on Report will be sent to the Financial Services Board (FSB). The final report is currently being finalised. The Fund won li:ga:on against the previous administrators (RFS) to the value of R86 million. Some of this money will be used to pay for the reconstruc:on project.

4 Member Benefit Statements Benefit Statements were printed in December 2013 and couriered to all employers. Statements were as at 31 August SMS sent to all members on 31 January 2014 to alert them to collect their statements from their employers. Only member who made a contribu3on to the Fund in Aug 2013 received statements.

5 Claims paid Death Disability Dismissed Retrench Normal Transfer and Retirement resignation S14 out Total claims paid Total claims received Acc 2013 Total Acc 2014 Total Over the last 18 months SALT EB has paid more than claims.

6 Sec 14 Back Log Report Jun- 12 Jan- 14 Cases at start of month Cases in drafting Cases with Trustees for signature 7 - Cases Cancelled Cases Cancelled paid as claims 12 Cases sent to Transferor/ Transferee Fund 4 3 Duplicate Case - 10 Cases submitted to FSB 29 - Cases pended by FSB - 8 Cases approved by FSB Balances of cases not started - - Total S14 cases left at end of the month

7 Fund Costs/Expenses Fund has very low costs compared to other large Funds in the industry. Cost is 3.9% of wages (if member earns R5000 the total fund cost is R 195 per month). Member pays 10% of wages as contribu:on to the Fund every month (R5000 R500 invested in the Fund every month). Employer pays 10% of wages as contribu:on on behalf of member (Of the R500 contribu:on, R305 is invested every month).

8 Fund Costs/Expenses Back Office cost R Front Office cost R Funeral R Risk (Death & disability) R Sub- total R Other costs include audit, actuarial fees, FSB levies, trustee fees, communica:on fees.

9 Funeral Benefits Members can add 6 spouses and 6 children. Fund is looking to add repatria:on of mortal remains.

10 Member Communica:on Communica:on Strategy for 2014 approved by the Board. Include SMS communica:on directly to members cell phones (first message sent on 31 Jan 2014). Posters produced and sent to Sanlam Front Offices. Z- fold Flyers on the Fund benefits (6 different ones) produced in November 2013 and distributed to all Sanlam Front Offices.

11 Member Communica:on Member newslefers planned for March and November Bi- annual electronic employer newslefers planned for the year. Visits to employers and member presenta:ons are scheduled on request from employers. Fund induc:on DVD to be produced in April 2014 and distributed to all Sanlam Front Offices and employers in the Road Freight industry.

12 Tax changes Effective 1 March 2014 Lump sum cash benefit R0 to R Tax liability Tax free R to R % R to R R and above R % of taxable income above R R % of taxable income above R Lump sum withdrawal benefit R0 to R Tax liability Tax free R to R % of the amount above R R to R R and above R % of the amount above R R % of the amount above R

13 Taxa:on Laws Amendment Act TAX DEDUCTIBILITY OF RETIREMENT FUND CONTRIBUTIONS From 1 March 2015, employer contribu:ons to re:rement funds will become a fringe benefit in the hands of employees for tax purposes. This means that employer contribu:ons to all types of re:rement funds will form part of an employee s taxable income. Individuals will be able to receive a tax deduc:on on employer and employee contribu:ons to a pension and/or provident fund up to 27.5% of the greater of remunera:on and taxable income. A ceiling of R will apply.

14 Taxa:on Laws Amendment Act LUMP SUM PAYMENTS (ANNUITISATION) From 1 March 2015 pension and provident funds will be harmonised (they will be exactly the same - all funds will operate like pension funds at re:rement). This means that aier the implementa:on date all Provident Fund members will only be allowed to take up to one third of their re:rement fund benefits in cash and must use two thirds to purchase an annuity (pension) from the Fund or from an insurer. However, vested rights of members will be protected - this means that exiswng balances in provident funds, and growth on these, can swll be paid as a cash lump sum when members rewre. New contribu:ons made to provident funds aier implementa:on day, and growth on these contribu:ons, will have to be used to purchase a pension.

15 Taxa:on Laws Amendment Act LUMP SUM PAYMENTS (ANNUITISATION) Cont. In addi:on, members of provident funds who are 55 or older on the date of implementa:on will s:ll have the op:on to take their full re:rement fund benefit as a cash lump sum on re:rement provided they remain in the same provident fund un:l they re:re. Members whose total benefit at re:rement is equal or less that R will have the op:on of taking their full benefit as a cash lump sum at re:rement.

16 QUESTIONS?