Liberty

Investments

Market overview

Ongoing review of market and environment

Moving to lower return/interest rate environment

Costs on investment products high

Need to focus on customer need

Regulatory change a constant!

What have we done :

Launch of Liberty Evolve and GateWay Investment Range

Pay on delivery investing

In excess of R20 billion invested

FullView launched to help advisers manage the complexity and

reporting

Liberty Agile launched to help guarantee retirement income

More to follow………..

Agile Retirement Range

Retirement Annuity

Pension Preserver

Provident Preserver

Existing retirement products… Don’t meet customer needs

What is first question you ask when doing a retirement plan for a client?

Existing Retirement Solutions

• Often inflexible

• An investor can contribute for years and not know what they will get in

retirement

• Risks and uncertainties

What’s the result

• Excessively cautious investments

• Retire with too little retirement savings

• Pensioners outlive their capital

What is risk?

15%

10%

5%

0%

-5%

-10%

15% 2003 2012

% CHANGE IN

ASSET VALUE

Harvard Business Review July – August 2014

15%

10%

5%

0%

-5%

-10%

15% 2003 2012

% CHANGE IN

RETIREMENT INCOME

Harvard Business Review July – August 2014

30% difference in standard of living – Low Risk??

What is risk?

Agile Retirement Range

Now you can guarantee your retirement income

Know today exactly what you will retire on.

Guaranteed.

How the Agile Investment range works?

How the Agile Investment range works?

Other Investment Portfolios

Very wide range of portfolios

• Liberty Trackers

• Internal Liberty portfolios (same as Evolve)

• All GateWay unit trusts

Over 100 portfolios available

Flat platform fee of 0.3% p.a.

Flexibility to stop, start and change contributions at any time with no charge

Exact Income Fund

The only portfolio that guarantees your income in retirement

For each investment in the Exact Income Fund (EIF) Liberty will

guarantee the level of income that it can buy in retirement.

For example:

Invest R100 000 today and Liberty will guarantee that it will provide

R3 000 per month in retirement.

No fees on this portfolio, but it pays 0.5% ongoing advice fee

Need for ongoing advice

Moving Targets

• You don’t know now exactly what income at retirement you will need

• Many things will change between now and retirement

• Salary

• Monthly expenditure

• House

• Spouse

• Other assets

• Interest Rates

• Market Returns

• Inflation

• etc

• Need to keep reviewing

• Retirement Plan

• How much is being invested each month

You can select your income type at retirement on Exact Income Fund

Remuneration

No upfront commission and no enhanced allocations

All as and when advice fees agreed with client in Advice Fee Mandate

Initial advice fees up to 3%

Ongoing advice fees

Exact Income Fund up to 0.5% p.a. (priced in)

Other Investment portfolios up to 1.0% p.a.

EIF Investment

values drop

Exact Income

Remains same

Ongoing advice fee on EIF

In the Exact Income Fund, client gets guaranteed income and certainty

• Ongoing advice fee should behave in the same way

Ongoing Advice Fee escalation rate applicable to all investments

• Once investment made, applies until retirement

• Can change for new investments as EPR’s change

e.g. Investment of R1m and the OAF escalation rate is 6%

OAF in year 1 is 0.5% of R1m = R5 000

In year 2 OAF is guaranteed to increase by 6% to R5 300

In year 3 OAF is guaranteed to increase by 6% to R5 618 etc.

Market value of EIF

• The EIF outcome at retirement is very low risk

• Targets an income in retirement

• This is known and guaranteed – doesn’t change

• Purpose is to keep until retirement

• The market value of this benefit does move daily and is volatile

• Investment value = Value of the annuity payments

• This moves with interest rates and longevity

Benefits before retirement

Restrictions:

What about death?

• Similar to Unit Trust based RA’s

• Market Value of investments

– No minimum death guarantee

What if my client wants to transfer?

• Benefit = Investment Value

• EIF – lose their guarantee, value may be volatile

Before retirement1 Retirement

RA Retire from age 55,

<55 only due to ill health

Pension Preserver One withdrawal before

retirement Provident Preserver

Options at retirement

• Retire together or separately

• Take up to 1/3 cash*

• Use the remainder to purchase an annuity

• For EIF Guaranteed Income:

– Single life annuity available as guaranteed

– Change income profile – select other life annuity with Liberty based on the ratio of

annuity rates

• Or the Investment Value may be used (OIP/EIF):

– To purchase a living annuity

– To purchase an annuity from another provider.

* Provident Preservers not limited to 1/3 – can take everything (for now)

What the Agile Retirement Range can do for you

What the Exact Income Fund can do for you

Conclusion

• Solves primary need in retirement: INCOME

• Investor can choose balance between:

One of a kind guarantee

• Start accruing guaranteed retirement income today

• Turn retirement planning into retirement knowing

Please send questions to agilefeedback@liberty.co.za before tomorrow morning

FLEXIBILITY CERTAINTY

Questions?