trustee report trustee report learning 0 · membership including pensioners of 8,477 as at 28...

ISASAIndependent Schools Association of Southern Africa

THE INDEPENDENT SCHOOLS ASSOCIATION OF SOUTHERN AFRICA PENSION SCHEME AND PROVIDENT FUND

2018LEARNING PLANNING LIVING

2 0 1 8 REPORT BY THE

BOARD OF TRUSTEES

Trustee Report

rustee ReportT

INTRODUCTION

MESSAGE FROM THE CHAIRMAN

MANAGEMENT AND CONTROL OF THE FUND

REVIEW OF THE YEAR’S ACTIVITIES

4.1 MEMBERSHIP

4.2 BENEFITS PAID

4.3 COSTING

4.4 RULE AMENDMENTS

INVESTMENTS

5.1 PENSION SCHEME (PART I)

5.1.1 OLD MUTUAL ABSOLUTE STABLE GROWTH PORTFOLIO

5.1.2 ALEXANDER FORBES INVESTMENTS PERFORMER PORTFOLIO

5.2 PENSION SCHEME (PART II) AND PROVIDENT FUND

5.2.1 INDEX-TRACKING LIFESTAGE MODEL

5.2.2 SHARI’AH PORTFOLIO

5.2.3 MONEY MARKET (BANKER) PORTFOLIO

PENSION INCREASES

DEFAULT REGULATIONS

DISABILITY INCOME BENEFITS

GENERAL

9.1 PRESERVATION OF BENEFITS

9.2 NOMINATION OF BENEFICIARIES

9.3 ADVICE TO MEMBERS

9.4 VOLUNTARY FAMILY FUNERAL COVER

9.5 OLD MUTUAL FUND SELECT ANNUITY

CONCLUSION - INVESTING IN YOUR FUTURE, NOW

MEMBER COMMUNICATION SAMPLE SHOWCASE

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T A B L E O F C O N T E N T S

LEARNING PLANNING LIVINGPAGE 02

H I G H L I G H T S

MULTIPLECOMMUNICATION

WINNER OF IRFA BEST PRACTICE

AWARDS

TOTAL ASSETS

R4.5 BILLION

VOLUNTARYFAMILY FUNERAL

SCHEME(R20 000 MEMBER

AND SPOUSE)

FUND WEBSITE

VISITS 252 221

(since inception)4000 MONTHLY

VISITORS

TOTAL MEMBERSHIP

OF 8 477

R541 MILLION PAID OUT

IN BENEFITS TO MEMBERS

AND PENSIONERS

ISASA


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1. INTRODUCTIONThe Trustees of the ISASA Pension Scheme and Provident Fund (`the Funds’) have pleasure in presenting their report for the financial year ended 28 February 2018. This report provides you with an overview of the activities, management, administration and financial status of the Fund during the past financial year.

2. CHAIRMAN’S OVERVIEWIt is my pleasure to report on the business of the Funds and for the year under review. 160 schools participated with a total membership including pensioners of 8,477 as at 28 February 2018. The past year was particularly volatile on the investment front fanned by multiple events, including Brexit, US Presidential Elections, Steinhoff and for local flavour - the exit of Mr. Zuma and entrance of Mr. Ramaphosa as the new South African President. Even some of the pundits got Brexit and Trump wrong! Forecast for the future . . . . the crystal ball is not so “crystal clear” for now.

Given the low visibility on the investment front, rest assured the Board is keeping a close watch. It is important to note the Funds are not in the business of timing the market, but rather having a long term focus. The market crash of 2008 is now history, post which we had some very positive investment returns. I am confident that the current volatility too shall pass - although experts advise that we are entering a lower return environment.

Despite ongoing volatility and uncertainty in investment markets the Pension Scheme managed to award a pension increase of 3.5% (approximately 76% of CPI) with effect from 1 September 2018. The implementation of the Funds’ new Goals-based LifeStage strategy in September 2017 was completed successfully. A passive Life Stage model was added as an alternative to the traditional active investment strategy followed by the Funds over the years and a Shari’ah portfolio was introduced on 1 April 2017 for members who want to conform to Islamic Law.

The Funds’ investment strategy now complies with the requirements of the new Default Regulations and aligns with the objectives of National Treasury to create cost-effective and appropriate investment portfolios. Member communication remains a priority for the Funds. During 2017 the Funds initiated a Back to Basics Campaign to explain Fund terminology and how the Funds work and we are pleased to see a remarkable increase in the understanding levels of our members. In the member research survey conducted in January 2018, 80% of members reported that the information received from the Funds was easy to understand and 81% reported that Fund communication helped them to prepare for retirement. Despite these positive trends we continue to look for and implement effective channels to interact with members.

The most popular communication channels are the Funds’ website and the Your Life (for members) and Living the Golden Years (for retirees) newsletters. The Funds developed two animated videos regarding saving for the future, suited to the whole family and available on the Funds’ website at www.isasapensionfund.co.za or www.isasaprovidentfund.co.za

During the year the Funds held face to face presentations at 8 participating schools. Presentations were focused on educating members regarding fund benefits and retirement planning. As at 28 February 2017 actuarial valuations for the Funds were performed and the Valuator reported that the Funds were in a sound financial position. The next statutory valuation is due as at 28 February 2020. The audit for the year ended 28 February 2018 has been finalised and the financial statements for the Funds were submitted to the FSB during September 2018.

The Board works tirelessly to protect your needs, improve control and operations and save costs on your behalf. This is especially important in these turbulent economic times.

Members are encouraged to remain fully invested, to save as much as possible for retirement and to avoid at all costs the temptation to use their hard-earned retirement savings for anything other than for that all-important purpose of providing for a comfortable future.

To my fellow Board members I say thank you for your commitment to the Funds and its members.

John LiackmanChairman of the Board of Trustees - ISASA Pension Scheme and Provident Fund


2018

THE BOARD OF TRUSTEES, AS AT FEBRUARY 2018, CONSISTS OF THE FOLLOWING MEMBERS:

John Liackman Chairman & Independent

Howard Rodd Trustee ISASA Investment Consultant

Andre Pienaar Trustee ISASA Actuary

Jamie Inglis Trustee ISASA Investment Consultant

Michael Acutt Trustee SABISA Bursar

Selwyn Marx Trustee SAHISA Head

Johnny Smith Trustee Member Central Region

Sue Greer Trustee Member Kwa-Zulu Natal Region

Lot Musasa Trustee Member North Region

Gary Sim Trustee Member North East Region

Heine Matthee Trustee Member South West Region

Mike Bandey Trustee Pensioner Retired Deputy Head

Simon Kroon Trustee Member South East Region

David Tshishivhiri Alternate Member North East Region

Alistair Dry Alternate SAHISA Head

Katherine Field Alternate Member Kwa-Zulu Natal Region

Julian Cameron Alternate Member South West Region

Penny York Alternate Member South East Region

Varinia Eddie Alternate Member Central Region

John Lobban who attended Trustee Meetings by invitation in an ex-officio capacity, as Director: Membership and Operations of ISASA retired during the year. Sandy Sagar has taken over from John.

Jamie Inglis has subsequently retired and been replaced by Mduduzi Ndlovu. The Board of Trustees greatly appreciates the many years of loyal service rendered by Jamie and is delighted to welcome an investment professional of Duzi’s experience.

3. MANAGEMENT AND CONTROL OF THE FUND

The Funds are managed by a Board of Trustees and administered by Old Mutual. The Board of Trustees of the Funds is

constituted in terms of the Funds’ Rules and the Pension Funds Act No 24 of 1956 (as amended).

The current Board consists of six regional Member-elected Trustees, one Pensioner- elected Trustee, and five Employer-

appointed Trustees which include a SAHISA representative, a SABISA representative, and three ISASA-appointed Trustees.

An independent Chairperson is also elected by the Board. There are also Alternate Member-elected Trustees, to act in the

absence of a Member-elected Trustee.

LEARNING PLANNING LIVING

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PRINCIPAL OFFICER – JOHN ROLLASON

(INDEPENDENT)

The Principal Officer is the executive representative of

the Funds, and official contact person for the Financial

Services Board. The Principal Officer has the same

fiduciary responsibilities to the Fund as those pertaining

to the Trustees.

SUB-COMMITTEES

The Funds are run with a sub-committee structure

reporting to the full Board. The following sub-committees

are in place:

1. Audit and Administration sub-committee;

2. Investment sub-committee;

3. Communication & Marketing sub-committee

1. AUDIT ADMINISTRATION AND RISK

SUB-COMMITTEE

The Audit, Administration and Risk sub-committee, formed

in 2003, meets on a quarterly basis. It consists of five

members, Johnny Smith (Chairman), Michael Acutt, André

Pienaar, Maryanne Lansdown and the Principal Officer,

John Rollason. The Funds’ actuary, Stephen Walker, and

representatives from the administrator attend the meetings

as observers. Varinia Eddie and Laura Kelty also attend as

observers. Representatives from the auditors attend once

a year to present the financial accounts.

2. INVESTMENT SUB-COMMITTEE

The Investment sub-committee, formed in 2007, meets

on a quarterly basis. It consists of five members, Howard

Rodd (Chairman), Jamie Inglis, Selwyn Marx, John Liackman

and the Principal Officer. The Funds’ actuary attends the

meetings as an observer. Jamie Inglis has subsequently

retired and been replaced by Mduduzi Ndlovu.

3. COMMUNICATION & MARKETING

SUB-COMMITTEE

The Communication & Marketing sub-committee, formed

in 2011, meets on a quarterly basis. It consists of five

members, Sue Greer (Chairperson), Mike Bandey, Selwyn

Marx, Sandy Sagar and John Rollason. The Board would

like to thank Di van Heerden, whose term of office ended

during the year, for her wise counsel over many years.

To assist the Trustees with the management and control

of the Funds, the following appointments were in place for

the year under review: (see table above right)

The Board continues to closely monitor all service

providers and the level of service received by the members.

They strive to ensure that issues arising are timeously and

effectively resolved.

4. REVIEW OF THE YEAR’S ACTIVITIES

4.1 MEMBERSHIP

PARTICIPATING SCHOOLS

As at 28 February 2018 there were 160 participating

schools in the Funds.

MEMBERSHIP OF THE PENSION SCHEME AND

PROVIDENT FUND

As at 28 February 2018 the membership of the Funds,

including pensioners and disability income members, is

detailed on the following page.

ADMINISTRATORS Old Mutual

AUDITORS Deloitte & Touche

ACTUARIESOld Mutual Corporate

Consultants

INVESTMENT MANAGERS

Investment Solutions

Limited

(name changed to

Alexander Forbes

Investments Limited on

1 July 2017)

FUND CONSULTANTSOld Mutual Corporate

Consultants

INSURED DEATH/

DISABILITY BENEFITSOld Mutual

COMMUNICATION

CONSULTANTRetirement Wise


2018

PENSIONER MEMBERS

Pensioners

Spouses

Children

1200

1000

800

600

400

200

02005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

698 74

4 789 83

4 890 94

3

922 96

5

966

975

963

127

137

152

162

169

179

182 20

1

99 120

214

384045506566656768

4236

PENSION SCHEME PART 1 & PART 11 MEMBERSHIP PART I (DefinedBenefit)

PART II (Defined

Contributions)

2005

8000

7000

6000

5000

4000

3000

2000

1000

02006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1749

2087 17

0523

09 2678

1591

1503

3246

1410

3576

1054

4159

914

4511

857

771

705

534

4878 54

67 5765 65

51

476

6878

2016

968

132

28

2016

PROVIDENT FUND MEMBERSHIP

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1800

1600

1400

1200

1000

800

600

400

200

0

934 967

1009

992

1041

1062 11

02 1134

1248

1264 1300

1355

2016

383

7048

2017

1389

2017

134

24

2017

949

2018

6862

360

2018

1255

955

227

20


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2018

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4.2 BENEFITS PAID

Benefits paid during the year were:

No of Members paid Amount paid in Benefits

Lump Sums Pension Fund

Provident Fund

Total Provident

Fund (R)

Part I (R)

Part II (R)

Total Pension Fund

(R)

Retirement 146 24 8,251,760 821,353 187,708,152 188,529,505

Death 23 10 4,252,771 3,540,257 26,305,190 29,845,447

Withdrawal 592 88 11,134,608 5,308,858 203,846,245 209,155,103

Retrenchment 19 3 88,158 1,299,752 1,299,752

Unclaimed Benefits 16 1,721,808 2,420,104 4,141,912

Divorce Orders 2 1 330,152 562,344 84,896 647,240

Paid to Pensioners 62 83,676,990

TOTAL 860 126 24,057,449 11,954,620 421,664,339 517,295,949

4.3 COSTING

The employer contribution to the Funds includes Fund-related costs. The Board of Trustees approved a budget for the 2019

financial year, an average of 0.5% of pensionable salaries for the Pension Scheme, and 0.7% for the Provident Fund.

The Fund costing is below market average and well managed by the Board.

The following important budgeted costs are included in the allocations for Pension Scheme and Provident Fund respectively.

• Administration Fees: 0.18% p.a. / 0.3%p.a

• Consulting & Actuarial Fees: 0.22% p.a. / 0.23% p.a.

• Fund operating expenses: 0.10% p.a. / 0.18% p.a.

As a member of the Fund, the costs of the insured benefits are paid from your employer contribution. The rates effective

01 March 2018 are:

Pension Scheme Summary

Part Benefit Insurer Premium Rate

Part 1 Group Life Old Mutual 0.55%

Part 1 Income Disability Old Mutual 0.679%

Part 11 Group Life Old Mutual

As Elected by the school:• 0.55%• 1.05%• 1.55%

Part 11 Income Disability Old Mutual 0.679%


Provident Fund Summary

Category Benefit Insurer Premium Rate

Category 1(B) Death & Lump Sum Disability Old Mutual 1.20%

Category 1 Lump Sum Disability Old Mutual Included in the rate of 1.20%

Category 2(A) Group Life Old Mutual 0.75%

Category 2(A) Income Disability Old Mutual 0.924%

The benefits provided by this cover have stood members in good stead.

4.4 RULE AMENDMENTSThe following Rule Amendments were made during the year.

Pension Scheme Rule Amendments

Rule amendment

no.

Motivation and description of rule

amendment

Date of Board of Fund’s resolution Effective date

Date registered by the Registrar of

Pension Funds

3

To include an enabling rule to the master rules which

permits a participating employer to grant a greater

benefit to a member on retirement at the cost of the

participating employer.

04 May 2017 04 May 2017 15 June 2017

4

To extend the definition of normal retirement date to

allow a participating employer to have a different normal

retirement date to that which is defined in the master rules. The composition of the board

of trustees increased to 12 (twelve) board members and the member elected board members increased to 7

(seven )

23 November 2017 01 December 2017 12 January 2018

Provident Fund Rule Amendments

Rule amendment

no.

Motivation and description of rule

amendment

Date of Board of Fund’s resolution Effective date

Date registered by the Registrar of

Pension Funds

3

To extend the definition of normal retirement date to

allow a participating employer to have a different normal

retirement date to that which is defined in the master rules; The composition of the board

of trustees increased to 12 (twelve) board members and the member elected board members increased to 7

(seven)

23 November 2017 01 December 2017 11 January 2018

PAGE 09

5. INVESTMENTS

The accumulated assets of the Fund at 28 February 2018, were as follows:

Global and local markets continue to be characterised by high volatility and, as a consequence of these fragilities, a continuing

considered approach to investment scenarios is essential.

The Trustees continue to feel that it would be unwise for members to react impulsively to the current financial turmoil. In

particular, they would advise against defined contribution members making large scale switches to their investments. The

LifeStage model is designed to mitigate the risk of the impact of poor investment markets in the critical period before a

member retires.

The Trustees also strongly recommend that all members who will be retiring or leaving the Funds in the foreseeable future

seek professional advice to ensure that their ongoing investments are appropriately structured.

Pension Scheme - Part I & Part ll Provident Fund

Total Funds as at 1/3/2017 R4,197,948,683 R236,267,719

Plus contributions R360,501,844 R27,510,810

Minus benefits and transfers (R564,079,931) (R69,108,064)

Minus expenses (R34,564,578) (R2,845,074)

Plus/minus net investment returns R249,434,517 R13,215,127

Reserve transfers (39,758,815)

TOTAL FUNDS as at 28/02/2018 R4,300,101,814 R215,369,677

5.1 PENSION SCHEME (PART I)

Pension Scheme (Part I) participating employers are allowed a choice of investing in the Old Mutual Absolute Stable

Growth Portfolio (AGP) or in the Alexander Forbes Investments Performer Portfolio (PP), or a combination of both.

Pensioner assets are invested in the Old Mutual AGP.

PeriodAGP Stable

2007 series

Inflation

(Headline)

1 Year Gross 8.6% 5.1%

1 Year Net 7.9%

3 Years Gross 8.4% 5.2%

3 Years Net 7.8%


5 Years Net 11.5%


10 Years Net 9.8%

5.1.1 OLD MUTUAL ABSOLUTE STABLE GROWTH PORTFOLIO

The Absolute Stable Growth Portfolio is a balanced,

smoothed bonus portfolio, whereby assets are invested in

a mix of asset classes (domestic and global shares, bonds,

property and cash), and a monthly bonus is declared, in order

to smooth out the daily fluctuations in the performance of

the asset classes.

As at 31 July 2018, the performance of the Absolute

Stable Growth Portfolio was:


2018 5.1.2 ALEXANDER FORBES INVESTMENTS PERFORMER PORTFOLIO

The Performer Portfolio is a diversified and market-related portfolio spread across a number of recognised asset management companies. Alexander Forbes Investments select and combine a number of different asset managers – each of whom invests in a mix of asset classes (domestic and global shares, bonds, property and cash).

Since it is a market-related portfolio, the value of the portfolio fluctuates daily, in accordance with the daily changes in the various asset classes.

As at 31 July 2018, the performance of the Performer Portfolio was:

Period Returns (Annualised) Benchmark CPI

1 Year Gross 7.44% 8.28% 5.1%

1 Year Net 6.80%

3 Years Gross 6.85% 6.98% 5.2%

3 Years Net 6.22%

5 Years Gross 10.29% 10.99% 5.4%

5 Years Net 9.65%

8 Years Gross 12.21% 13.02% 5.4%

8 Years Net 11.54%

“The Trustees also strongly recommend that all members who

will be retiring or leaving the Funds in the foreseeable future

seek professional advice to ensure that their ongoing investments

are appropriately structured.”


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5.2 PENSION SCHEME (PART II) AND PROVIDENT FUND

The investment strategy of the above Funds was changed, with effect from 1 September 2017, to provide members with a default Goals-based LifeStage model.

The new Goals-based LifeStage model aims to give you more certainty about the

amount of pension you can expect at retirement.

Growth phasePerformer

TransitionQuarterly switches

Protection phaseProtector

5 years toRetirement

2 years toRetirement

Normal Retirement Age

Growing your savings for retirement

The first stage in the LifeStage investment strategy

focuses on growing your savings for retirement.

This is when you have a long time to retirement and

can take more investment risk to increase potential

investment returns.

Preparing for retirement

The second stage focuses on preparing for

retirement. The Goals-based investment strategy

focuses on protecting the the level of projected

pension income.

HOW IS GOALS-BASED INVESTING DIFFERENT FROM TRADITIONAL INVESTING?

• It defines risk as being the risk of you falling short of your main goal, which is to meet your minimum income

requirements during retirement.

• It uses investment strategies and asset classes that are more resilient in relation to the projected income that

will be achieved for a member at retirement.

In addition, members who do not wish to follow the LifeStage model have the flexibility of selecting their own

portfolio from a range of seven portfolios offered by the Trustees.


2018As at 31 July 2018 the performance of the two Goals-based LifeStage portfolios are indicated below:

New 5 YEAR DE-RISKING: Number of months from retirement

From Months To Months Performer Protector

More than 60 months from retirement 100.00% 0%

60 58 92.31% 7.69%

57 55 84.62% 15.38%

54 52 76.93% 23.07%

51 49 69.24% 30.76%

48 46 61.55% 38.45%

45 43 53.85% 46.15%

42 40 46.15% 53.85%

39 37 38.45% 61.55%

36 34 30.76% 69.24%

33 31 23.07% 76.93%

30 28 15.38% 84.62%

27 25 7.69% 92.31%

24 0 0% 100.00%

Members who elected the LifeStage model or members who were defaulted to the LifeStage model, are invested in

the Performer and Protector portfolios, of the new Goals-based LifeStage model with effect from 1 September 2017

as set out below:

Period Performer Protector CPI

1 Year Gross 7.44% 0.90%* 5.1%

1 Year Net 6.80% 0.66%* 5.1%

Benchmark 8.28% 0.58%*

*Returns are for 6 months only, inception date 1 September 2018


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PAGE 13

5.2.2 SHARI’AH PORTFOLIO

With effect from 1 April 2017 the Fund added a Shari’ah portfolio that conforms to Islamic Law. The portfolio prohibits an

investment portfolio from investing in companies which are involved in gambling, alcohol, non-permitted entertainment,

tobacco, pork and other defined forbidden activities, including the earning of income from interest.

Members who elect this portfolio for religious reasons can be assured that the underlying portfolio managers adhere to

the prescribed guidelines as all investments are thoroughly screened and analysed to ensure conformity to Shari’ah Law.

PORTFOLIO OBJECTIVE

The Shari’ah High Growth Portfolio is a multi-asset class or balanced portfolio that maintains a relatively large holding

in equity instruments. The objective is to provide a relatively high rate of capital growth, when compared to other asset

allocation funds. The portfolio will also invest in property and approved bond (sukuk) instruments.

5.2.1 INDEX-TRACKING LIFESTAGE MODEL

The Index-tracking LifeStage model is similar to the default LifeStage in that it uses just two portfolios and the time

horizons for the switches from the growth portfolio to the protection portfolio are the same, i.e. starting from five

years to retirement and ending at two years from retirement. The important differences are that the two portfolios are

low cost index tracking portfolios and the protection portfolio is NOT goals-based.

The index-tracking portfolios are:

Balanced Index Fund

Conservative Index Fund.

As at 31 July 2018 the performance of the two Index LifeStage portfolios are indicated below:

July 2018 Balanced Index Conservative Index CPI

1 Year Gross 4.75% 5.56% 5.1%

1 Year Net 4.48% 6.05%

3 Years Gross 6.09% 5.44% 5.2%

3 Years Net 5.78% 5.14%

5 Years Gross 9.97% 6.35% 5.4%

5 Years Net 9.64% 6.05%

“Never doubt a small group ofthoughtful, committed people can

change the world. Indeed, it is the only thing that ever has.”

– Margaret Mead


2018

“Most South Africans

do not save adequately

for retirement and only about half

the country’s workers belong to a retirement fund.”

5.2.3 MONEY MARKET (BANKER) PORTFOLIO

The Money Market portfolio is a portfolio invested in short-term money market instruments that should deliver returns

in excess of those expected from bank deposits.

July 2018 Returns (Annualised) Benchmark CPI

1 Year Gross 8.73% 6.67% 5.1%

1 Year Net 8.46%

3 Years Gross 8.70% 6.69% 5.2%

3 Years Net 8.43%

5 Years Gross 7.96% 6.16% 5.4%

5 Years Net 7.69%

July 2018 Returns (Annualised) Benchmark CPI

1 Year Gross 0.84%* 2.90% 5.1%

1 Year Net 0.29%* 2.90% 5.1%

The portfolio is based on a selection of underlying investments that comply with the criteria for Shari’ah investments. It is

classified as a multi-managed high-equity portfolio that is well diversified by asset class in accordance with Regulation 28

of the Pension Funds Act 24 of 1956.

As at 31 July 2018 the performance of the Shari’ah portfolio was:

*Inception date 1 August 2017


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6. PENSION INCREASES

At their meeting on 25 August 2018, the Trustees declared an increase of 3.5% with effect from 1 September 2018.

With inflation running at 4.6% for the 12 months ended 30 June 2018, the increase of 3.5% represents approximately 76% of the current inflation rate.

The table setting out actual increases to pensioners over recent years follows:

*Note that the figures for the “CPI over period” are reported for year on year ending 31 August except those from

2015 onwards which are reported for year on year ending 30 June 2018. The 30 June CPI figure is used for the basis of

future increases to allow more time for the Trustees to assess the financial position of the Pensioner Account, against a

consistent CPI (inflation) measure, prior to the announcement of the annual pension increase.

Date of Increase Increase CPI over period Increase as % of CPI

1.9.2005 8.0% 3.9% 205%

1.9.2006 18.0% 5.4% 333%

1.9.2007 20.0% 6.7% 299%

1.9.2008 12.0% 13.7% 91%

1.9.2009 0.0% 6.4% 0%

1.9.2010 0.0% 3.5% 0%

1.9.2011 5.0% 5.3% 94%

1.9.2012 3.5% 5.0% 70%

1.9.2013 7.0% 6.4% 109%

1.9.2014 6.0% 6.6% 91%

1.9.2015 4.7% 4.7% 100%

1.9.2016 5.3% 6.3% 84%

1.9.2017 2.6% 6.1% 50%

1.9.2018 3.5% 4.6% 76%

“Life is about

doing things that

matter first,

not last”

– Richard Norton



rustee ReportT7. DEFAULT REGULATIONS

On 25 August 2017, the Minister of Finance issued the final ‘default’ regulations to the Pension Funds Act (‘regulations’).

The regulations aim to improve the outcomes for members by ensuring that they get good value for their savings and

retire comfortably. The regulations require all retirement funds in South Africa to ensure they provide:

• A default preservation strategy;

• A default investment strategy;

• A default annuity strategy.

DEFAULT PRESERVATION STRATEGY

The regulations require trustees to offer a default in-fund preservation arrangement to members who leave the service

of a participating employer before retirement.

Fund rules will need to be amended to allow for resigning employees automatically to leave their accumulated retire-

ment savings in the fund. However, members will have the right to opt out of the fund and withdraw their fund credit

in cash or to transfer to any other fund. Employees must obtain retirement benefit counselling before they make a

decision to take cash or transfer the benefit.

Your Funds are currently looking at creating a default preservation option for members and this will be

implemented by 31 March 2019.

DEFAULT INVESTMENT STRATEGY (PORTFOLIO)

The regulations require trustees to offer a default investment portfolio(s) to contributing members who do not exer-

cise any choice regarding how their contributions should be invested.

The investment portfolio(s) that members are defaulted into should be appropriate, reasonably priced, well communi-

cated to members, and offer good value for money.

Trustees are required to monitor investment portfolios regularly to ensure continued compliance with these principles

and rules. They must also consider active and passive options.

Your Funds are ahead of this requirement with the new Goals-based default LifeStage strategy that was

introduced on 1 September 2017. In addition, the Funds now offer both a passive LifeStage model and a

Shari’ah-compliant portfolio on a member choice basis.

PAGE 17

ANNUITY STRATEGY

For retiring members, a fund should have an annuity

strategy with annuity options, either an in-fund or out-of-

fund annuity or annuities. This means the annuity can be in

the name of the fund or the member.

A life annuity, once chosen or defaulted into, becomes

irreversible. To better manage this irreversibility, retiring

members can only move into an annuity with their consent.

This election by the retiring member makes the purchase

of an annuity a “soft default” by having the member “opt-in”

instead of “opting-out”.

The annuity should also be appropriate for members, well

communicated and offer good value for money.

Members should be given access to retirement benefits

counselling not less than 3 months before their normal

retirement date. Trustees must review the annuity strategy

at least annually.

Your Funds are ahead of this requirement as it has

offered a Default Annuity, the Old Mutual Fund Select

Annuity (FSA), since June 2013. The Trustees believe

it may be a good solution for members, because it is

easy to invest in, and it provides a reliable monthly

pension for life.

IMPLEMENTATION TIMELINES

All new default arrangements that come into operation on or

after 1 September 2017 must comply with the requirements

in the regulations. Existing default arrangements must be

fully aligned to the regulations by 1 March 2019.

National Treasury will monitor, assess and review the

implementation and effectiveness of the regulations, to

make sure members are protected against excessive fees,

excessively complex and opaque products and certain bad

practices.

8. DISABILITY INCOME BENEFITS

The payment of disability income benefits are subject to

acceptance by the insurer in terms of the policies held in

the names of the employers, outside of the Fund.

“Preservation occurs when

money saved for retirement

through pension, provident

and preservation funds

remain in those funds until

the person retires, or is

rolled over into another

similar retirement savings

vehicle without incurring

taxes or penalties when a

person changes jobs. ”



rustee ReportT9. GENERAL

9.1 PRESERVATION OF BENEFITS

When withdrawing from the Fund and considering what to do with your fund benefit, the preservation of your retirement

savings should always be your first consideration.

Preservation occurs when money saved for retirement through pension, provident and preservation funds remain in

those funds until the person retires, or is rolled over into another similar retirement savings vehicle without incurring

taxes or penalties when a person changes jobs.

Retirement savings, for the average worker, are the single largest source of income post retirement. However, rates of

preservation are very low. Cashing out accumulated retirement savings prematurely erodes financial security in old age,

undermines the alleviation of poverty and increases reliance on others.

Government has proposed various options to increase rates of preservation in recognition of the need to protect

retirement savings.

Fund benefits can be preserved and kept in the retirement funding system by placing them in a retirement

annuity, transferring them to your new employer’s fund or to a preservation fund.

9.2 NOMINATION OF BENEFICIARIES One of the most challenging tasks facing the Trustees is to ensure that lump sum benefits paid on the death of a member

are equitably allocated to the appropriate dependants of that member. Although the nomination form is not binding on

the Trustees, it does serve as an important guide in the event of the death of a member.

The Trustees therefore urge all members of the Funds to ensure that their Nomination of Beneficiary forms are

completed and submitted to their Bursar, and thereafter updated on a regular basis, to reflect an accurate record of the

status of each member’s dependants and/or nominees.

This form can be obtained from your Bursar or directly from the Funds’ websites at www.isasaprovidentfund.co.za or

www.isasapensionfund.co.za

9.3 ADVICE TO MEMBERSIt is crucial that members seek and obtain appropriate advice from a financial adviser on the investment of their benefits

before leaving the Funds, especially in the lead-up to retirement. To find an accredited financial adviser you can visit the

Financial Planning Institute’s website at www.fpi.co.za or you can phone Old Mutual on 0860 388 873.

PAGE 19

9.4 VOLUNTARY FAMILY FUNERAL COVER

PEACE OF MIND

Arranging a funeral for a loved one is difficult and stressful and many families need additional financial assistance to pay

for a for this. The Voluntary Family Funeral Benefit not only helps you pay for the funeral but also provides a Support

Service giving you total peace of mind.

FUNERAL COVER FOR YOU AND YOUR FAMILY

The Voluntary Funeral Benefit (“Family Cover Policy”) is available at a premium of R20 per member per month and

offers funeral cover of up to R20 000. This is a valuable benefit that covers you and your immediate family members.

The benefit is paid to respective beneficiaries on submission of all required documents within 48 hours of a claim.

ADDITIONAL INFORMATION ABOUT THE POLICY BENEFITS

Funeral Support Service

Members insured under the Family Cover Policy with Old Mutual Group Assurance, their spouses and dependent

children will have access to the Funeral Support Service at no extra charge.

This service provides for transportation of the deceased by road or air to the final funeral home, closest to the place

of burial in South Africa or its Neighbouring Countries*, from anywhere in the world.

In addition, the service also includes the following features:

• A 24-hour call centre, which caters for all 11 official languages.

• Referral to reputable undertakers and providers of other funeral services e.g. catering, tents/marquees, etc.

• Discounted funeral packages with a network of funeral service providers.

• Assistance in finding a tombstone provider.

• Where death occurs within South Africa, a relative may accompany the body to the funeral home and, if needed,

overnight accommodation will be provided at no additional cost.

• Legal assistance can be provided regarding funeral procedures, e.g. death certificate, removal of body, etc.

• Advice on handling of all necessary documentation such as obtaining a death certificate and cross-border

documentation.

• Referral to a pathologist if an autopsy is necessary.

• The service can be accessed at any time by calling 0860 000 500.

* Neighbouring Countries shall mean Namibia, Zimbabwe, Botswana, Swaziland, Lesotho and Mozambique (south of the 22˚

parallel in Mozambique).

ISASA FAMILY COVER - OLD MUTUAL

Primary Insured (Member) R20 000

Insured Spouse R20 000

Insured Child Aged older than 14 R20 000

Insured Child Aged between 6 and 14 R10 000

Insured Child Aged between 2 and 6 R5 000

Insured Child Aged less than 2 and stillborn R5 000


2018Participation

Current employees have the option of joining the Family Cover Policy when the school first joins the ISASA Pension

Scheme or Provident Fund. Thereafter, members may only join at the following review date (1 March).

New employees will have the option to join the Family Cover Policy when they first join the school and thereafter also

at the following review date (1March) by asking the bursar to be included in the scheme.

Once you leave the Fund, you will not be covered under this scheme anymore. You will not be able to continue on an

individual basis.

9.5 OLD MUTUAL FUND SELECT ANNUITY

At retirement members often struggle to make the right choice of annuity. Since June 2013 the ISASA Trustees have

offered members the Old Mutual Fund Select Annuity (FSA) as one possible pension solution.

The Trustees believe it may be a good solution for members, because it is easy to invest in, and it provides a reliable

monthly pension for life.

Best of all, it is cost effective because the charges members pay are similar to those that are usually only available to

staff of big companies, not individuals.

BENEFITS OF THE FSA INCLUDE:

• It is safe – as it will last your whole life;

• It is cost-effective – as it’s offered to you at good rates that would normally only be available to employees

retiring from a big company; and

• It is trusted – it is offered by Old Mutual.

Members who are ten years from retirement will receive a FSA quotation via e-mail.

The quotation will give the member a good idea of what they can expect to receive as a monthly income after retirement,

based on their current Accumulated Credit. Thereafter they will receive these quotes annually until retirement.


rustee ReportT

PAGE 21

10. CONCLUSION - INVESTING IN YOUR FUTURE, NOW

Investing is not one size fits all. Different strategies work

for different investors and different situations. Additionally,

an investor might employ more than one strategy, or choose a

variety of investment vehicles depending upon their goals.

Have a plan and a strategy. Just like going on trip in your car, it

is important that investors have a plan and a destination in mind

before investing their money. Your goals—whether planning for

retirement or buying a home—dictate your time horizon, which

dictates your tolerance for risk. Additionally, you want to make

sure that you diversify your investments so that some do well

when the rest of your portfolio might not. This approach allows

an investor to construct a portfolio that is in line with their risk

tolerance and that balances potential return with some downside

risk protection. Hopefully our Trustee Report has provided some

insights and good ideas as you invest for your future.

In the early seventies, the Association of Private Schools resolved

to establish a group pensions and life assurance scheme for the

purpose of providing benefits on retirement and ancillary benefits

on death, disablement or resignation, for staff of private schools

that elected to participate in the Scheme. The Scheme is managed

by a Board of Trustees. The overall package of benefits are kept

under close review by the Trustees and improved from time to

time, in order to maintain the Scheme in a modern, relevant

format.

The ISASA Pension Scheme and Provident Funds are administered

by Old Mutual Employee Benefits which have continued to

improve their service over the years and have steadily built up

the expertise and data that is needed to manage this now large,

widely spread and complex Fund.

With a defined contribution funds, it is crucial that members

seek and are given sound and appropriate advice on investments

of their accumulated credits before going on retirement. In

conjunction with Old Mutual, the Trustees have put together a

team of Old Mutual trained, controlled and disciplined consultants

who are able to advise members on their needs in retirement and

appropriate avenues for investing funds.

Additional information is available on the

ISASA Pension Scheme and Provident Fund website.

“Investing is not

one size fits all.

Different strategies work

for different investors

and different situations.

Additionally, an investor

might employ more than

one strategy, or choose

a variety of investment

vehicles depending upon

their goals.”



rustee ReportT

In the event of any conflict between this Report and the Rules of the Fund, the latter will prevail.

S A M P L E S H O W C A S E11. MEMBER COMMUNICATION

PAGE 23


We thank the following talented ISASA artist

and photographer pensioners for sharing

their creative masterpieces and moments

with us in this

Annual Trustee Report:

Liesje Carter,

Mervyn Gray

Estelle Hale,

Suzanne Hill,

Barbara Marais,

Fuber Nothard

Owen Roberts,

Margaret Smith,

Melanie Thomson

and Kirsten van der Riet

2018 REPORT BY

THE BOARD OF TRUSTEES

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