Sanlam Staff Umbrella Pension & Provident Fund ( SSUF ) Member Information Session

Transcription

1 Sanlam Staff Umbrella Pension & Provident Fund ( SSUF ) Member Information Session Yvette Harris Principal Consultant April 2015

2 FAIS Acknowledgement Simeka Consultants & Actuaries is a licensed financial services provider: FAIS Registration Number Providing factual information on a group basis, not advice May be appropriate to engage an individual financial adviser to do an financial needs analysis on an individual basis

3 Contents Are you on track with your retirement savings? Retirement Projection Statement Investment changes Allan Gray Global Balanced Portfolio Sanlam Lifestage Passive investments Retirement Reform Disability Income Benefit (PHI) Changes Postponed Retirement Postponement of T-Day Member Trustee Election SSUF Website

4 Are you on track with your retirement savings?

5 rough rule of thumb milestones for retirement savings 12 times 40 years 7 times 30 years 20 years 4 times after 10 years 2 times

6 Are you on track with your retirement savings? What level of income do you need at retirement? Aim for 75% no need to contribute to retirement fund house paid off children financially independent Lower costs no need to travel to work etc.

7 Are you on track with your retirement savings? Called your Projected Pension Ratio (PPR) The pension that you will be able to purchase with your fund value Expressed as a percentage of your TGP when you retire, less your net contributions Example: If your TGP at retirement is R p.a. and your PPR is 75% then your annual pension will amount to R p.a.

8 Are you on track with your retirement savings? How is your PPR calculated Based on your current: TGP Fund value Total net contribution rate Normal retirement age And Best estimate of future investment returns Other assumptions Refer to the back of your Retirement Projection Statement

9 Sample Retirement Projection Statement

10 Are you on track with your retirement savings? Your Projected Pension Ratio (PPR) is 45% However, If investment returns are 1% lower than expected 35% If you take early retirement 5 years prior to NRD 30% If you retire at your NRD and you increase your contributions by 5% of PEAR it will increase to 60%

11 Are you on track with your retirement savings? What are the factors that affect your PPR? Contribution rate Investment return Retirement age Fund value - Preserving your benefit

12 Are you on track with your retirement savings? Your Projected Pension Ratio (PPR) is 45% Investment return If investment returns are 1% lower than expected 35% Retirement age If you take early retirement 5 years prior to NRD 30% Contribution rate Preserving your benefit If you retire at your NRD and you increase your contributions by 5% of PEAR it will increase to 60% No preserving 35% Preserving 56%

13 Are you on track with your retirement savings? So what can you do to increase your PPR? 1 Ensure that your fund value is invested appropriately 2 3 Review / Increase your member / employer contribution rate Preserve your full retirement savings when changing jobs 4 Retirement age the longer you save, the higher your PPR will be

14 What now? Look out for your Retirement Projection Statement (RPS) on SAP Review the factors that can influence your PPR Use the PPR calculator on the Fund s Website for assistance Contribution rates may be increased before 8 May 2015 on SAP

15 Investment Changes

16 Changes to Investment Options Effective 1 June 2015 Existing Option New (replacement) Option Allan Gray Domestic Balanced Fund Allan Gray Global Balanced Fund Lifestage Programme Sanlam Lifestage

17 Allan Gray Global Balanced Fund Allan Gray Domestic Balanced Allan Gray Global Balanced Global assets

18 Allan Gray Global Balanced Fund Why the Allan Gray Global Balanced Fund? Same risk / return properties Exposure to global assets More consistent outperformance of its benchmark with lower volatility over long-term Fund values will automatically be transferred to the Allan Gray Global Balanced Fund by 1 June 2015 and Future contributions will be allocated to Allan Gray Global Balanced Fund

19 Lifestage Investing What is a Lifestage approach? Invest for capital growth while you are young and have a long time horizon Automatically de-risk as you get closer to retirement and Align your fund value with targeted retirement annuity What are the benefits of a Lifestage approach? Members enjoy a seamless investment from employment to retirement Members do not need to make any investment choices Lifestage is the SSUF default portfolio but

20 Changing to Sanlam Lifestage Enhancements: Offers greater asset allocation flexibility - improve growth and lower risk Simpler model only has two phases: Accumulation & Preservation Smoother de-risking process - 2% of fund value from Accumulation to Preservation portfolios from 6 years before retirement Three different preservation portfolios to better match targeted retirement annuity Portfolio Preservation: Capital Protection Preservation: ILLA Preservation Inflation Linked Targeted Annuity a With Profit Annuity a Living Annuity an Inflation Linked Insured Annuity

21 Sanlam Lifestage

22 Sanlam Lifestage Sanlam Lifestage de-risking strategy 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to retirement Accumulation Preservation

23 Sanlam Lifestage Existing Lifestage allowed members to: Invest in the Lifestage as an active choice or by default; or Fully invest (100% ) in building blocks (e.g. Accumulation, Consolidation A, Consolidation B, Preservation) or Partially invest in building blocks Members will not be allowed to invest in building blocks Either fully in Sanlam Lifestage or not at all!

24 If FULLY invested in Lifestage Building Blocks Lifestage Building Block Portfolio Accumulation Phase Consolidation Phase A Investment linked annuities Consolidation Phase A Insured Consolidation Phase B Investment linked annuities Consolidation Phase B Insured Preservation Phase Investment Linked Preservation Phase Insured Portfolio to be switched to 50/50 Coronation Managed & Allan Gray Global Balanced SIM Moderate Sanlam Absolute Return Sanlam Absolute Return Sanlam Stable Bonus Sanlam Stable Bonus Sanlam Stable Bonus Future contributions will also be allocated as per the above

25 If PARTIALLY Blocks invested in Lifestage Building The portion of fund value that is invested in Lifestage Building Block will be transferred proportionately to other non-lifestage portfolio/s Example: Fund value allocation before changes Fund value allocation after changes 20% Accumulation Portfolio 0% 20% Coronation Managed 25% Coronation Managed 20% Sanlam Monthly Bonus 25% Sanlam Monthly Bonus 20% Sanlam Stable Bonus 25% Sanlam Stable Bonus 20% Sanlam Cash 25% Sanlam Cash Future contributions will also be allocated as per the above

26 What Now? If you do not want to have your fund value and future contributions transferred then you must change your investment selection via Retirement Fund Web at This change will be free will not count as annual free switch SSUF - Temporary freeze during 13 May and 1 June 2015 Changes finalised by 1 June 2015

27 Passive Investing Feedback Was considered (2014 and 2015) and will not be added to the investment menu : Perceived to have lower fees: initial investigations revealed that the fee for a balanced passive option is similar to some of the current active portfolios Demand: the demand for passive investments in SA has been low. Less than 1% of members utilise the passive option when made available Which Index: the decision on selecting the kind of index to be tracked is an active decision and requires more analysis Will be reconsidered in 2016

28 Retirement Reform Update

29 Disability Income Benefit (PHI) Changes

30 Disability Income Benefit (PHI) Changes: 1 March 2015 Changes to the Income Tax Act relating to PHI policies Previously premiums were tax deductible (tax-free) and benefits taxed Premiums no longer tax-deductible - have become taxable and benefits tax-free High earners may be advantaged Could have long-term consequences for all employees Employer / Trustees responded by introducing a few changes

31 Disability Income Benefit (PHI) Changes: 1 March 2015 New disability benefit (PHI) structure: If disabled, employee will receive tax free disability income benefit Gross benefit reduced however net of tax benefit is slightly more than before Premium rate reduced by 13%, from 1.017% to 0.885% of TGP No change in insurance waivers (member 7.5% & employer 10.7%) paid by Insurer to the SSUF

32 Disability Income Benefit (PHI) Changes: 1 March 2015 Other changes: PHI premium became a separate after-tax deduction on pay slip SSUF Contribution categories remain the same but excludes PHI premium Slightly reduced take home pay Increased retirement savings Important: The new legislation will not adversely affect the retirement provision of employees

33 Example: Employee s remuneration Before March 2015

34 Example: Employee s remuneration From March 2015

35 Example: Impact on take home-pay & retirement savings TGP R pm / PEAR R pm Before March 2015 Impact on take-home pay From March 2015 Difference Cash Salary R R Pay slip deductions R2247 R2378 R 133 Take-home pay R R (R 133) Reduction in take home pay Impact on retirement savings 17.5% employer contribution to SSUF Employer contribution R2100 R2100 Less premium for death cover (R120) (R120) Less premium for disability (R153) (R0) R 153 Savings for retirement R1 827 R1 980 R 153 Increase in retirement savings

36 Disability Income Benefit (PHI) Changes: 1 March 2015 Important Employee can select lower employer contribution rate during flex period (22 April 8 May 2015) if not already on minimum rate of 7.5% Warning: Lower employer contribution rate = increase in tax payable and lower retirement savings Warning: If you reduce your employer contribution savings for retirement will be less and your PPR will be smaller

37 Postponed Retirement

38 Postponed Retirement: 1 March 2015 Changes to Income Tax Act allows retiring members to postpone payment of their retirement benefit until a later date Current rules Benefit must be paid when employee retires from employer s service New rules as from 1 March 2015 Members can postpone the payment of their retirement benefits

39 Postponed Retirement: 1 March 2015 Conditions Member cannot take part in cash and postpone 2/3 rd required to the buy the pension No further contributions to SSUF Member will not qualify for death, disability or any other risk benefits Member may make investment switches same rules as for other members Members will pay a monthly admin fee deducted from benefits If a member dies during postponement the accumulated fund values will be payable as a death benefit to member s estate HRSS will inform members of the procedure at retirement

40 How Postponed Retirement benefits members Age PPR 60 50% 61 53% 62 56% 63 60% 64 64% 65 68% 66 73% 67 78% 68 83% 69 89% 70 95% PPR at age 60 increases significantly although no further contributions Longer investment term Cost of the life annuity reduces each year that annuitisation is postponed

41 T-Day: 1 March 2015 Postponed The Key Changes Tax harmonisation across retirement saving vehicles Own and employer contributions deductible up to 27.5% / R p.a. Provident funds annuitisation at retirement (2/3 rd to buy a pension) protection of vested benefits up to T-Day T-Day now set for either 1 March 2016 or 1 March 2017 T-Day (Tax Day) is not to be confused with P-Day (Preservation Day) Withdrawal benefits will not be affected!

42 Member Trustee Election and New SSUF Website

43 Fund Management Board of Trustees Managed by a board of 10 trustees: 5 employer appointed 5 member elected Member election underway - every 3 years last election 2012 Member trustee representation: two from Sanlam Personal Finance (SPF) (including Sanlam Sky); one from Sanlam Investments one from the remaining businesses (Group Office, SEB, SEM, ITISS, etc.) one from Santam Note: Santam election held in 2014, again in 2017

44 Current Member Trustees Trustee Alternate Expiry date of term of office Jannie van Zyl (SPF) Arthur Zerf (SPF) 30 June 2015 Johann de Wet (Glacier) Vacant 30 June 2015 Rajesh Sukha (SI) Vacant 30 June 2015 Anton Swanepoel (SEB) David Gluckman (SEB) 30 June 2015 Maryke Kotzé (Santam) André Lotz (Santam) 28 February 2017

45 Current Employer Trustees Trustee Alternate Expiry date of term of office Robert Goff (SPF) Vionne Tregurtha (SI) 1 July 2015 Haydn Frankeiss (SI ) Jill Rose (SPF) 1 July 2015 ML Carstens (SEB) Ahmed Banderker (SPF) 1 July 2015 Werner Barnard (SPF) Clifton Janse van Rensburg (SPF) 1 July 2015 Lizet Murray (Santam) Joseph Makgoba (Santam) 28 Feb 2015

46 Member Trustee Election Important Dates 8 May 2015 : Closing of nominations 18 May 2015 : Announcement of nominations / commencement of voting procedure 15 June 2015 : Voting closes 29 June 2015 : Announcement of the elected trustees Please nominate and vote for your member representative

47 Launching the SSUF Website Please log onto the new SSUF Website on:

48 Thank you