ALEXANDER FORBES UMBRELLA FUNDS

ALEXANDER FORBES UMBRELLA FUNDS INFO I ISSUE 1 I 2020

It’s a brand-new chapter – the beginning of a new year and a new decade. We’ll help you prioritise your savings now so that you can enjoy fi nancial well-being in the years to come.

BUILDINGBUILDING AA SUSTAINABLESUSTAINABLE

FUTURE

Start by assessing your fi nancesSpeak to a fi nancial adviser and make adjustments to build a sustainable future. As trustees of the Alexander Forbes Retirement Fund (AFRF), our main goal is to help you protect and grow your retirement savings over time.

The AFRF is part of a large umbrella fund, which combines the retirement saving investments of over 1 300 participating employers. Being part of an umbrella fund means costs are lower and professional trustees are looking after your retirement savings in the fund.

In this, the fi rst Umbrella Funds Info issue of 2020, we:■ remind you of boosting your

savings in the fund to earn more when you retire

■ unpack your savings options if you change jobs or get retrenched

■ offer insights into how retirement funds are governed in a new governance section

■ look at the impact of low investment returns

What to expect from this issue

As we have told you in previous communication, the fund administrator changed from Alexander Forbes Life to Alexander Forbes Financial Services on 1 December 2019. The change was seamless and there was no impact on you.

Fund update

Increase your contribution rateIf your employer allows you to change your monthly contributions, it’s recommended you choose a higher percentage or amount. Typically, these changes are scheduled for once or twice a year.

2. Extra contributions You can also increase your retirement

contributions during the year by means of an additional voluntary contribution (AVC). This option allows you to put extra money into the fund every month or once off.

R

R

ALEXANDER FORBES

SUSTAINABLE WAYS TO SAVE IN 2020

Your retirement savings are there to help you live from day to day when you retire and no longer have a salary coming in every month.

Would you like more income when you retire? Here are two ways you can put extra money into the fund:

How does this work?

Next steps

Meet 20-year-old

Molly Molly decided to stop using the canteen for her meals and resisted indulging in ‘special’ coffees.

She saves R200 each month and uses this to put extra money into the fund.

R

See how Molly discovers the real power of compound interest

20 R200

480

Her extra monthly amount

until age 60

Age

12 months in a year

40 (years left before retirement)

months

××××

R96 000

At 60 years old (retirement), Molly has an extra R96 000 on top of her retirement savings.

Real value

R200480

Contact the Alexander Forbes

Individual Advice Centre on 0860 100 444 to speak to

an accredited fi nancial adviser. It is important that you

consider this option within your overall retirement

and savings plans.

Complete the formand give it to your

human resources or payroll department to show them what you would like to do. You can also speak to them if you have any questions about putting extra money

in the fund.

2

UMBRELLA FUNDS INFO

If you are retrenched or resign, before you make any decisions that could affect your retirement savings, it’s a good idea to read the options on leaving brochure or contact the contact centre for more information on your options.

Some of the options available to you is that you can keep your money invested in the fund or consider using the Alexander Forbes Retirement Income Solution (AFRIS). This could be a retirement annuity or preservation fund.

TAXpay no tax on transfer

(unless you transfer from a pension to provident fund)

can take some or all of your retirement savings in cash if you were retrenched but you can do this once only

can’t make additional contributions

can’t withdraw any money until you retire, unless you emigrate

can top up your retirement savings whenever you have extra cash to do so if you were retrenched and haven’t found a new job yet

■ can put your retirement on hold (defer it) and continue to contribute so that you can build up more savings for your retirement years

■ keep your retirement savings in one place – it’s easy to keep track of and you can combine any other retirement annuities you have in one cost-effective plan

WITHDRAWALS

TOP-UP OR ADDITIONAL CONTRIBUTIONS

EXTRA BENEFITS

Retirement annuity fund

AFRIS

Preservation fund

With AFRIS you:

If you still don’t know what to do with your retirement money, after considering your options you should speak to an accredited fi nancial adviser who understands your needs and personal circumstances and can explain fi nancial jargon. If you don’t have a fi nancial adviser, you can ask for one through the Alexander Forbes Individual Advice Centre on 0860 100 444 or call the Financial Planning Institute of Southern Africa on +27 (0)11 470 6000 to fi nd an accredited fi nancial adviser. You can also check your fi nancial adviser’s credentials on www.fpi.co.za.

LEAVING YOUR EMPLOYER? HERE ARE YOUR OPTIONS

What will you do with your retirement savings from your employer when you resign or get retrenched? There are basically two rules to follow:

You can also take all your money out of your retirement savings but then you won’t be able to earn the income you need when you retire.

If you had to retire today, would you be able to survive on 28.8%1 of your current income?

for every

R10 000earned per month

The average fund member would only get

R2 880 as a pension.

This is because most members withdraw their retirement fund savings instead of keeping them invested when they change jobs.

Consider keeping your retirement money simply where it is or moving it to a new fund. In both instances, it can keep on growing to give you an income in retirement one day.

RULE #1– keep your retirement money invested!

RULE #2don’t cash in all your retirement savings!

1 Member Watch™ Survey 2018

3

ALEXANDER FORBESALEXANDER FORBES

THE IMPORTANCE OF GOOD GOVERNANCE

Is your retirement money in safe hands?

The law requires every retirement fund to have an investment policy statement.

money in safe hands?

Which laws are you talking

about?

Regulation 28 of the Pension Funds Act as well

as the Pension Fund Circular number130 (PF 130 in short)

from the Financial Sector Conduct Authority.

What is an investment policy statement and

why is it needed?

An investment policy statement records the investment strategy

that the fund implements. Trustees get expert advice

from specialists to establish an appropriate investment strategy aligned to the objectives and

review it regularly.

Who are trustees?

Trustees are professionals who have been chosen or

appointed to govern and look after members’ interests and

retirement money in the fund. What are trustees

responsible for by law?

Trustees place the interests of the retirement fund members

fi rst, always acting in their best interests. The trustees

aim to give members the best chance of securing a reasonable

pension at retirement.

4

UMBRELLA FUNDS INFO

UNDERSTANDING THE IMPACT OF LOW INVESTMENT RETURNS

2019 was a challenging investment year, as market performance across the world came under pressure as a result of short-term ups and downs, which is expected to continue into 2020 and beyond.

Investment performance is not expected to keep up with the cost of living to the same extent to which we have become used to in the past and the trustees, with their advisers, have reviewed the investment strategy of the fund to position the portfolios for this expected environment. For example, we are looking at alternative investment classes such as private equity, which consists of funds and investors that invest directly in private companies for improved investment returns.

Putting your investment into perspective

There will be diffi cult times along any investment journey that may cloud good judgement and reason. The secret is to remain patient and remain focused on the end-goal.

In the past, we have seen afair share of periods where

markets have contracted and periods where markets have recovered to beat infl ation.

You might feel concerned that the high growth portfolio is

slightly under target. Remember, that investments rise and fall each month. Like the sun disappears when it rains, it eventually rises again. Keeping your retirement

savings invested for the long-term is most important.

There’s a lot of truth to the saying ‘investment returns don’t

come in a straight line’. This is because fi nancial markets have cycles of high and low

performance, which you’ll see refl ected in the investment returns on pages 6 to 8.

5

ALEXANDER FORBESALEXANDER FORBESALEXANDER FORBES

ALEXANDER FORBES RETIREMENT FUND – A LOOK AT INVESTMENT RETURNS FROM FIVE INVESTMENT PORTFOLIOS AT THE END OF DECEMBER 2019

If you are in an Alexander Forbes goal-based lifestage model portfolio

31 December 2019 3 years

5 years

AF High Growth9.76% 5.63% 5.95%10.16% 6.22% 6.35% Target

investment return

Investment return

AF Balanced High Growth

10.94% 7.23% 7.46%10.65% 6.48% 6.31%

AF Passive Bold 9.62% 5.73% 5.98%10.02% 5.80% 6.05%

7.34%6.40%

AFRF Protector

AFRF Passive Protector

6.67%6.44%

Target investment return

Investment return

Target investment return

Investment return

Target investment return

Investment return

Target investment return

Investment return

6

Investment return

Investment return

If you have chosen your own investment strategy or portfolios

Multimanager investment portfolios 31 December 2019 3 years 5 years

AFRF Accelerator 12.31% 7.17% –

Target investment return 10.64% 6.19% –

AFRF Banker 8.72% 8.78% 8.53%

Target investment return 6.64% 6.70% 6.55%

AFRF Conserver 10.06% 8.22% 7.32%

Target investment return 8.30% 6.88% 6.57%

AFRF Performer 10.94% 7.23% 7.46%

Target investment return 10.65% 6.48% 6.31%

AFRF Real Return Focus 8.79% 7.34% 7.04%

Target investment return 7.63% 8.49% 9.15%

AFRF Stable Focus Combined 9.69% 7.66% 6.95%

Target investment return 6.61% 7.48% 8.15%

AFRF Spectrum 10.91% 6.66% 6.33%

Target investment return 10.73% 6.43% 5.95%

AFRF Shari'ah High Growth 12.98% – –

Target investment return 11.88% – –

AFRF Shari'ah Medium Growth 11.07% – –

Target investment return 9.43% – –

UMBRELLA FUNDS INFO

Single manager investment portfolios 31 December 2019 3 years 5 years

AFRF Allan Gray Classic Balanced 7.40% 5.96% 7.30%

Target investment return 10.65% 6.48% 6.31%

AFRF Coronation Best Investment II

14.61% 7.31% 6.84%

Target investment return 10.65% 6.48% 6.31%

AFRF Coronation Managed I

14.61% 7.31% 6.84%

Target investment return 10.65% 6.48% 6.31%

AFRF Foord Asset Management (best investment view portfolio)

12.21% 5.75% 5.72%

Target investment return 10.65% 6.48% 6.31%

AFRF Investec Asset Management (best investment view portfolio)

11.79% 8.30% 8.50%

Target investment return 10.65% 6.48% 6.31%

AFRF Investec Cautious Managed

10.57% 7.61% 7.30%

Target investment return 9.67% 7.48% 7.12%

AFRF Oasis Asset Management (best investment view portfolio)

9.06% 5.42% 5.60%

Target investment return 10.65% 6.48% 6.31%

AFRF Prudential 10.59% 7.15% 7.39%

Target investment return 10.65% 6.48% 6.31%

7

Closed investment portfolios 31 December 2019 3 years 5 years

AF High/Medium Growth 9.37% 6.02% 6.23%

Target investment return 8.60% 6.04% 6.20%

AF Medium Growth 9.16% 6.69% 6.75%

Target investment return 8.20% 6.09% 6.24%

AF Medium/Conservative Growth 9.17% 7.06% 7.10%

Target investment return 7.56% 5.91% 6.06%

AF Conservative Growth 9.03% 7.14% 7.20%

Target investment return 7.14% 5.82% 5.91%

AF Balanced High/Medium Growth 10.67% 7.30% 7.32%

Target investment return 9.86% 6.72% 6.71%

AF Balanced Medium Growth 10.39% 7.40% 7.20%

Target investment return 9.07% 6.94% 7.10%

AF Balanced Medium/Conservative Growth

10.12% 7.47% 7.05%

Target investment return 8.26% 7.14% 7.47%

AF Balanced Conservative Growth 9.63% 7.63% 6.85%

Target investment return 6.77% 7.53% 8.18%

Closed investment portfolios 31 December 2019 3 years 5 years

AF Passive Bold/ Moderate 8.29% 5.75% 6.00%

Target investment return 8.38% 5.61% 5.87%

AF Passive Moderate 8.19% 5.95% 6.16%

Target 8.03% 5.67% 5.87%

AF Passive Moderate/Cautious 7.99% 6.24% 6.45%

Target investment return 7.46% 5.68% 5.88%

AF Passive Cautious 7.91% 6.65% 6.77%

Target investment return 7.11% 5.81% 5.92%

AF Life Coronation Fund Managers 14.61% 7.31% 6.84%

Target investment return 10.65% 6.48% 6.31%

AF Life FullVest 5.10% 6.53% 7.63%

Target 3.56% 4.45% 4.94%

AF Life Stable Focus 9.61% 7.59% 6.73%

Target investment return 6.61% 7.48% 8.15%

AF Life Allan Gray (best investment view portfolio)

5.66% 5.30% 7.32%

Target investment return 10.65% 6.48% 6.31%

the fund in general: afrfqueries@aforbes.computting your retirement on hold (deferring it) to save more: afrfclaims@aforbes.com or call 0860 100 333 (Monday to Friday, 08:30 to 17:30) about keeping your retirement savings invested in the fund or having a living annuity in the fund:

investadmin@aforbes.com or call 011 324 3457 (Monday to Friday, 08:30 to 17:30)

Alexander Forbes Financial Services is a licensed fi nancial services provider (FSP 1177 and registration number 1969/018487/07).

Credits: Alexander Forbes Communications (production) | Getty Images (imagery)

19806-NL-2020-01

Talk to us if you have any queries about: