Information SessionsMarch 2018

Agenda

1. Your Board of Trustees

2. Contributions and Tax

3. CoE and DPA

4. Investment Choices

5. Investment Returns

6. Understanding your Benefit Statement

7. Amendments to the Rules

8. Information Sources

9. Disclaimer

10. Questions

Board of Trustees: 7 December 2016 to 31 December 2019.

Trustees appointed by Council

• Mr Smartdryck Abrahams

• Mr Emlyn Balarin

• Dr Joel Chigada

• Ms Joanna Legutko

• Prof. Anton Le Roux

• Ms Yolokazi Quwe

• Prof. Steve Richardson

• Mr Glenn Hurlow (Alternate)

Member-elected Trustees

• Assoc. Prof. Phillip de Jager

• Ms Judith du Toit

• Ms Lesley Haddow

• Ms Tracy Johnson

• Ms Karin Lehmann

• Mr Hardy Maritz

• Ms Margie Tainton

• Prof. Jan Glazewski (Alternate)

Contributions Structure

ContributionsCurrently UCT makes the full contribution to the UCTRF out of your CoE based on a percentage of your DPA.

Current structure: Retirement savings 20.173% 19.648% Risk benefits/Admin* 2.3267% 1.2635% Total (% of DPA) 22.5% 20.912%

*The risk premiums and administration fee will be revised in March 2018.

Contributions to pension, provident or individual Retirement Annuities totaling the lesser of 27.5% of taxable income or remuneration or R350 000 will be taxed.

Additional Voluntary Contributions

If you want to increase your retirement savings you can request UCT to make additional contributions to your UCTRF retirement saving. Any percentage between 1 to 10% of your DPA as additional retirement savings.

There is no deduction from these contributions toward risk premiums or administration fees, so they are pure retirement savings.

They will reduce your take home pay.

COE and DPA

Your Deemed Pensionable Amount (DPA) is a percentage of your Cost of Employment (CoE) and is a figure used to calculate the amount allocated to the UCTRF and UCTRF benefits.

You may elect this percentage and when your salary changes (usually at the beginning of each year).

Everything to do with the UCTRF works on the DPA.

In order to maximize savings increase your DPA.You may choose between 50% of COE to 100% of COE.

At a COE of R100 000 p.a.A 50% DPA means your contribution is R11 250 p.a.

COEs and DPAs

In order to maximize savings increase your DPA.You may choose between 50% of COE to 100% of COE.

At a COE of R100 000 p.a.A 50% DPA means your contribution is R11 250 p.a.A 70% DPA means your contribution is R15 750 p.a.

COEs and DPAs

In order to maximize savings increase your DPA.You may choose between 50% of COE to 100% of COE.

At a COE of R100 000 p.a.A 50% DPA means your contribution is R11 250 p.a.A 70% DPA means your contribution is R15 750 p.a.A 100% DPA means your contribution is R22 500 p.a.

COEs and DPAs

Your DPA determines the level of death cover you have both in regard to:• the separate (1 x DPA for Perm Staff and 3 x DPA for Contract Staff whose

contract started before 1 July 2017 ) unapproved group life cover *; and• the multiple cover (6x DPA)** provided under the UCTRF in respect of all

permanent staff and T2 contract staff whose current contract started on or after 1 July 2017.

* Unless you elected a higher multiple.* * Unless you have decided to reduce this multiple.

COEs and DPAs

Your DPA also determines the level disability benefit you receive with regard to:

• the Income Continuation Benefit you will get if you are unable to work for reasons of ill health (in respect of permanent staff only);

• the cash lump sum (equal to the separate unapproved group life cover) you will receive if you are totally and permanently disabled.

COEs and DPAs

Investments

Investment Policy Statement

Portfolio Investment Objective Investment Horizon

Income Fund (Portfolio A) 1% p.a. (net of costs & taxes) above CPI over

any 12 month period, with minimal risk of capital loss over the same period

0 – 2 years

Smoothed Bonus Fund (Portfolio B)3% p.a. (net of costs and taxes) above CPI

over rolling 5 years (insurer capital guarantee of all contributions/lump sums)

3 – 5 years

Balanced Fund (Portfolio C) 5% p.a. (net of costs & taxes) above CPI over

rolling 7 years7 years +

Shari’ah Fund (Portfolio D)Expected to be 3 - 4% p.a. (net of costs)

above CPI over rolling 7 years5 – 7 years

Life Stage Model

Designed for members that are happy to follow a structured model.

• Model reflects normal retirement age of 65 for all UCTRF members.

• Model simply varies investment strategy on period to assumed normal retirement age.

Investment Switches

• The process to change your investment portfolios has changed. Before 1 July 2017 you couldonly change your investment portfolios on 31 March and 30 September.

• You may now switch portfolios at any time and are no longer restricted to only being able toswitch biannually. You will get one free switch between 1 April 2017 and 30 June 2018.Should you switch more than once in this period there will be a fee of R491.00 per switch.After 1 July 2018 members will get one free switch in each period between 1 July and 30 Juneand subsequent switches will incur the applicable administration fee at the time, which will bedebited to your fund credit.

• Because the UCTRF is a member-investment choice fund, the Board believes that it isnecessary that all members have the fullest opportunity to make informed decisions aboutthese matters.

• The UCTRF Website www.uctrf.co.za has a toolkit which includes a retirement calculator tohelp you plan for retirement. We encourage you to read this and use the Website.

Common mistakesToo conservative an investment strategy

• When faced with investment choice, members often choose too “conservative” a channel relative to the risks they face.

• This error can have severely negative financial consequences. For example, if a 25 year old member decides to invest his/her retirement savings in the Income Fund over his/her entire working life (i.e. for 35 to 40 years), he/she could end up with a pension some 35% to 50% less than had he/she invested more appropriately in the Balanced Fund for the majority of the time.

• So, if you are young and you are not concerned about your final payment risk, you should invest primarily to manage your inflation risk.

Trying to "time the market" • Some members believe that they can "time" the share market. This means they try to get

out at the "top of the share market" and buy back in at the bottom of the share market.• The evidence shows that members who try to "time" the market usually get it wrong. • The evidence also shows that members chase the share market when it is near its highs (the

worst time to do so) and avoid the share market after a sharp fall (often the best time to get back into the share market).

If you can consistently time the market correctly, you are almost certainly in the wrong job!

2017 Summary of Investment Returns.

The Shari’ah Fund, Portfolio D, was introduced on 1 April 2010 and does not yet have a 7-year track record.

* inception date is 1 April 2010 for Portfolio D, 1 January 1995 for the other portfolios.

Below is an example of the differences between the long-term actual returns overthe different investment portfolios achieved over a 22- year period.

Note the short-term fluctuations (gains and losses) in the all share index, but also look at the long-term returns.

Below is an example of the differences between the long-term actual returns over the different investment portfolios achieved over a 7-year period.

Monthly Performance

As you would expect, the Balanced Fund (Portfolio C) shows the largest variation in monthly returns,reflecting the riskier nature of this portfolio, but with the highest returns since inception.

• Monthly returns for the four portfolios during 2017. These figures are shown after investment manager fees.

• Note: inception date is 1 April 2010 for Portfolio D, 1 January 1995 for the other portfolios.

Understanding your benefit statement

Understanding your benefit statement

Understanding your benefit statement

Amendments to the Rules

Rule Amendment No. 1 was registered by the Financial Services Board on 5 October 2017.

The purpose of this amendment is to provide for the following:

• The UCTRF has the option to pay a portion of the Living Annuity Balance of a deceasedLiving Annuitant to his/her Dependant or Nominee in a lump sum, and to apply thebalance to pay a Living Annuity to such Dependant or Nominee from the UCTRF.

• A member who is 60 when he or she joins the UCTRF and fails to make a choice withregard to the investment portfolio(s) his/her benefit must be invested in, will be investedin a cash portfolio until he or she makes an election.

Information Resources

• Benefit information sessions (on 1st and 2nd Tuesday each month in theBremner Bldg, UCT)

• UCTRF website www.uctrf.co.za

• Information session (held in March)

• Retirement Planning seminars (held in the third quarter)

• AGM (held in the third quarter)

Disclaimer

This presentation is for information purposes only.

The information contained herein is not intended to be, and must not be regarded as, financial advice or advice as defined in the Financial Advice and Intermediary Services Act (37 of 2002).

The University of Cape Town Retirement Fund (the ‘UCTRF’), the UCTRF Board, the Principal Officer and staff of the UCTRF Office, together with the UCTRF’s service providers, shall not be liable for any loss or harm or damage which may be suffered by any person as a result of the use or reliance upon the information presented herein, or any discussions between the aforementioned and any person arising from the presentation.

In the event of any discrepancy between the presentation and either the UCTRF Rules or the UCTRF’s Insurance Policies, the Rules and Policies will prevail. The Pension Funds Act 25 of 1956 overrides all Rules and Insurance Policies.

Thank YouAny Questions?