Sanlam Umbrella Fund - Outoftheblue

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Create STRENGTH in numbers 2012 Trustee Report Sanlam Umbrella Fund

Transcript of Sanlam Umbrella Fund - Outoftheblue

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Create STRENGTH in numbers 2012 Trustee Report

Sanlam Umbrella Fund

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Why choose the Sanlam Umbrella Fund?

The Sanlam Umbrella Fund provides a structure for

employers to offer their employees a flexible package

of retirement savings and insured benefit options. This

offers employers and their employees a cost-effective

and need-specific savings solution in an environment

characterised by poor pension decisions for retirement,

high costs, low savings levels and consumption-driven

debt.

Under the Sanlam Umbrella Fund, employers can

choose to participate in a pension fund or a provident

fund. Employers can also choose between the following

options:

• SanlamFuturaOption: This low-cost, packaged

solution is founded on the solidarity principle with

uniform fee structures applying to all employees.

• StandardOption: all the employees’ investments are

invested in the employer selected default investment

strategy.

• ComprehensiveOption: the employees can opt

out of their employer’s selected default investment

strategy and choose a tailored investment strategy

that suits their personal needs.

All three options offer a practical and cost-effective

way to save for retirement. The Standard and

Comprehensive options allow participating employers

to add any combination of insured benefits – such

as group life insurance, disability benefits, accident

benefits and family funeral aid cover – to best meet

their employees’ insurance requirements.

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Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Board of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Fund Officers and Sub-committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Administration Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Audit Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Communication Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Complaints Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Death Benefits Allocation Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Governance & Risks Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Insured Benefits Management Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . 12

Investments Sub-committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Rules Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Sanlam Umbrella Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Sanlam Employee Benefits Benchmark Survey . . . . . . . . . . . . . . . . . . . . . . . . . 19

Retirement Fund Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Sanlam Futura Umbrella Retirement Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

The Fund in Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Annual Revision Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Our Consulting Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Joint Forums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Industry Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

In Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Annexure A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Annexure B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

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IntroductionThe purpose of this report is to highlight for our members the key achievements covering the 2011 calendar year and the first half of 2012, and to outline some of our future plans.

The Sanlam Umbrella Fund comprises three legal entities being the Sanlam Umbrella Pension Fund, the Sanlam Umbrella Provident Fund and the Sanlam Futura Umbrella Retirement Fund. This report is targeted primarily at stakeholders in the first two mentioned entities, but some developments as regards Sanlam Futura are also mentioned for the sake of completeness. A separate report will be issued to stakeholders in the Sanlam Futura Umbrella Retirement Fund.

Our vision is to harness Sanlam’s brand strength and financial muscle to build a retirement fund that offers true value for money to our members. Core to this vision is to bring down costs for members via economies of scale, to underpin our offering by excellent governance overseen by a professional Board of Trustees and to have the utmost respect for business ethics.

As a responsible corporate citizen the Fund endeavours to protect, enhance and invest in the wellbeing of the economy, society and the natural environment. It also conducts its operations in a sustainable manner, i.e. in a way that meets existing needs without compromising the ability of future generations to meet their needs.

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Board of TrusteesMany of the problems faced by the retirement fund industry can be attributed to poor governance. We are therefore committed to maintain a strong emphasis on governance to ensure that members’ interests are protected.

The Sanlam Umbrella Fund is a commercial umbrella fund, and Sanlam as the product sponsor aims to balance doing business for profit by delivering good quality and transparent services to the Fund and its members. The objective of the Fund is to provide members with a retirement fund solution that offers great value and security, and that assists members to improve their financial security by way of adequate retirement provision and insurance cover.

The Board of Trustees has been structured with these principles uppermost in mind. We have a fully representative governance structure. The Sanlam Umbrella Fund is managed by a board of six trustees, three of whom are appointed by Sanlam and three of whom are elected by the member representatives from a panel of suitably qualified industry professionals – all independent of Sanlam.

The current Board has been in place since the 2009 elections. The three Sanlam-appointed trustees are Derek Smorenburg, Marius Jönas and Phelisa Ngonyama, with Marius Saayman the alternate Sanlam-appointed trustee. The members of the Sanlam Umbrella Fund elected Ian McDonald, Dalene Willemse and Alex Paterson as their elected representatives on the Board of Trustees, with Henry Dul as their alternate representative. 2012 is another election year and the members of the Sanlam Umbrella Fund can vote for their preferred candidates, from a list of suitably qualified candidates to represent their interests on the Board of Trustees.

The Board constitutes a balance of power as required by King III. The majority of the trustees are “non-executive” in the sense that they are not employed by the sponsor (Sanlam). This allows the Board to take decisions on a stakeholder inclusive approach, i.e. the Board specifically takes into consideration the legitimate interests and expectations of our stakeholders.

The trustees elected Derek Smorenburg as their chairman for a second term during 2009. It is worth highlighting that Derek retired as a Sanlam

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employee at the end of 2009 and is not an independent trustee for the purposes of King III. The Board will, however, honour the appointment made and will appoint a lead independent trustee to provide leadership in those instances where the chairman may be conflicted.

The trustees appointed by the sponsor are employed and remunerated by the sponsor. The member-elected professional and independent trustees receive a market-related fee for their services, based on the number of meetings they are required to prepare for and attend. The principal officer receives an annual fee based on an hourly rate multiplied by the number of hours estimated to perform the agreed functions. The members of the Fund Secretariat are salaried employees in the full-time employment of the sponsor and seconded to the Fund at substantially the same costs.

The Board has a strong mix of skills. Each of the trustees makes an important contribution to the debates at our trustee meetings and other interactions. Although all the trustees are industry professionals with a diverse range of skills, it is worth highlighting the following:

Sanlam-appointed trustees:

• Derek Smorenburg’s experience managing a commercial umbrella fund

• Marius Jönas’s skills in managing a standard offering for smaller employers

• Phelisa Ngonyama’s training and experience in the asset management industry

• Alternate trustee Marius Saayman’s strong accounting and financial background.

Independent trustees:

• Alex Paterson expert knowledge in human resource management and industrial relations.

• Dalene Willemse’s enquiring legal mind and experience as an independent trustee

• Ian McDonald’s legal experience (ex-assistant Pension Funds Adjudicator), especially in the Death Benefits Allocation Sub-committee

• Alternate trustee Henry Dul’s strong consulting background and diverse experience within the retirement funds industry.

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The Board meets formally three times each year. In 2011 formal trustee

meetings were held on 3 March, 15 June 1 and 19 October. During the first

half of 2012 a strategy day was held on 7 February, and formal trustee

meetings were held on 26 March, 20 June and 17 October.

Fund Officers and Sub-committeesA professional Principal Officer (Kobus Hanekom) supported by a

Fund Secretariat (headed by Erina le Grange) manages the day-to-day

operations of the Fund’s governance and ensures compliance with all

regulatory requirements.

One of the first initiatives of the new Board of Trustees has been to

implement Sub-committees to take care of special day-to-day issues, and

to formally report to the full Board which remains responsible for taking

final decisions. The following Sub-committees are fully functional and meet

regularly:

• Administration Sub-committee chaired Mike O’Donovan

• Audit Sub-committee chaired by Marius Saayman

• Governance & Risks Sub-committee chaired by Kobus Hanekom

• Communication Sub-committee chaired by Dalene Bennett

• Complaints Sub-committee chaired by Kobus Hanekom

• Death Benefits Allocation Sub-committee chaired by Ian McDonald

• Insured Benefits Management Sub-committee chaired by Mike O’

Donovan

• Investments Sub-committee chaired by David Gluckman.

Performance assessments of the Board, the Sub-committees, the trustees,

Principal Officer and the service providers were undertaken in early 2012,

and the results were reviewed at the 26 March 2012 trustee meeting. We

are proud to report that the results indicate that the Fund’s commitment to

its members is shared by all. This process keeps all officers and providers

focused, and it assists us to identify areas for improvement.

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Administration Sub-committee

Steady improvement has been made to enhance the administration service delivery to our participating employers and members. This is evidenced by our various service level measures and by the feedback we continuously receive from our participating employers and their consultants. We have also witnessed a steady and significant decrease in the number of complaints being formally reported to the Sub-committee via the Fund Secretariat which we believe is reflective of the good work of the administrator.

In the second half of 2011, the Retirement Fund Administration business was separated into Standalone administration and Umbrella Fund administration, acknowledging the different administration and servicing models required for these two groups of Funds. At the beginning of 2012 the Umbrella Fund administration unit was moved to the Sanlam Umbrella Solutions business to better align the development of Umbrella Fund specific administration with the product development and strategic growth objectives of the business. During the past 12 months the Fund has grown by 30 000 members and an additional R2 billion assets under management. As reported last year, the rapid growth in the Fund’s membership put certain administration processes under strain.

Compliance with the Pension Funds Act in respect of timely payment of monthly contributions and the submission of a reconciling schedule by participating employers continues to be a particular challenge for many smaller employers. This is partly attributable to tough economic conditions which have put some employers under cash flow pressure and also to inadequate communication and education of clients as to their obligations. These obligations include paying by the 7th of the month, submitting a matching schedule with the breakdown of payments to member level, and supplying new entrant and exit documentation on time.

Significant effort continues to be made on administration system enhancements with particular emphasis on the monthly contribution receipting process, exit payment process, benefit statement process and Retirement Fund Web. We also focus on streamlining and speeding up the Section 14 transfer process, which is particularly important considering our strong growth, and we are very proud of the highly controlled process that we have put in place overseen by the Fund Secretariat team.

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The service level agreement between the Fund and the administrator

documents the expected service delivery against which the Board

measures the administrator’s service delivery. This is the service standard

that our clients can reasonably expect barring those circumstances where

specific reasonable mitigating reasons apply. A summary of this service

level agreement was published for our clients in the January 2012 edition of

The Fund in Detail.

Audit Sub-committee

The Audit Sub-committee concentrates on issues relating to the

preparation of the Fund’s annual financial reports and the annual audit of

the Sanlam Umbrella Pension Fund and the Sanlam Umbrella Provident

Fund, working with the administrator’s fund accountant and the appointed

external auditors being RSM Betty & Dickson. Although the Administration

Sub-committee attends to internal controls relating to the Fund, this Sub-

committee also gets specific feedback from the auditors regarding any

concerns that they may come across during their audit.

The audited financial statements for the year ending 31 December 2011

were formally approved by the trustees, and these audited financial

statements were thereafter lodged with the Financial Services Board within

the regulatory deadlines.

The external auditors have confirmed that, in their professional opinion,

the annual financial statements for the year ended 31 December 2011 have

been prepared, in all material respects, in accordance with the basis of

preparation applicable to South African retirement funds. Importantly,

the external audit did not uncover any significant matters that need to be

reported to the membership.

These audited financial statements reveal that the Pension Fund’s total

assets have increased to R3,0 billion representing 22 702 active members

(R2,4 billion and 18 602 active members reported at previous year-end)

and that the Provident Fund’s total assets have increased to R2,9 billion

representing 50 310 active members (R2,0 billion and 39 510 active

members reported at previous year-end).

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Communication Sub-committee

The Communication Sub-committee is continuously exploring new ways to enhance communication to our members and other stakeholders. To guide them in their efforts, the committee has conducted a survey among all stakeholders, inviting their opinions on the most effective communication medium for our members.

A quarterly electronic newsletter has been introduced and distributed from the first quarter in 2011. This e-newsletter updates participating employers, Joint Forums and members on the latest news and developments related to the Sanlam Umbrella Fund, and it includes information such as:

• Monthly investment fact sheets

• Quarterly investment updates to the Joint Forum

• Periodic industry updates to the Joint Forum

• Member newsletters.

To help new members understand their retirement fund better, all new members joining the Fund from January 2012 are issued with a printed New Member Guide in either English or Afrikaans. (Members who joined the Fund prior to this date may request a printed New Member Guide.)

Member information brochures have also been developed to help members understand their insured benefits, which include:

• Benefits on retirement

• Benefits on withdrawal

• Benefits on termination of an employer’s participation in the Fund

• Disability benefits

• Death benefits.

Another exciting initiative launched in 2012 is the Member Chat newsflash that aims to educate members on financial matters. This regular chat letter is distributed to members in printed as well as electronic versions, and topics covered thus far include:

• “Did you know your retirement fund is the best place to save?”

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• “Protect your nest egg – even from yourself!”

• “How you can make better provision for your retirement”

Four Investment DVDs (each comprising some 2 hours of footage) were released covering the periods January 2010 to December 2011 as a unique first for the South African umbrella fund market. These professional Investment DVDs form part of our continued efforts to support and educate our participating employers and members, and their appointed benefit consultants. We intend to issue regular updates, with the next version planned to cover the period ending December 2012.

Further enhancements are planned on our Retirement Fund Web facility to ensure that this important communication medium remains efficient, user-friendly and relevant.

Complaints Sub-committee

The Fund adopted a formal complaints procedure and maintains a complaints register where every complaint is logged and monitored. This process ensures that complaints are dealt with at the appropriate level and that, where necessary, corrected action can be identified and taken without delay.

A few complaints were filed with the Pension Fund Adjudicator during the past year. Most complaints referred to administrative enquiries which could have been explained or resolved without complications by the admin inquiry support desk or in terms of the Fund’s complaint procedure. The Fund welcomes the Pension Fund Adjudicator’s proposed strategy to require all complainants to first make use of the Fund’s internal complaints resolution procedure.

None of the complaints are considered a high risk to the Fund. The subcommittee also did not detect any trend or concern in relation to any aspect of the Fund’s service delivery that requires special corrective action.

Death Benefits Allocation Sub-committee

The Death Benefits Allocation Sub-committee met at least once each month over the review period. Each month, this committee determined

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the distribution of benefits among the dependants and nominees of, on average, 35 deceased members.

Applying the vagaries of Section 37C of the Act at arm’s length has never been an easy task. However, with the assistance of a clearly stated mandate from the Board, the Sub-committee was able to ensure that the benefits arising from the Fund were appropriately and fairly distributed among the deceased members’ beneficiaries in their time of greatest need. This mandate comes in the form of the Death Claims Protocol which is applied in conjunction with the tried and tested Sanlam Benefit Calculator.

Much of the credit for this must be attributed to the tireless efforts and in-depth investigations of our Fund Secretariat team which has gathered and analysed a substantial amount of information to present the Sub-committee with a clear picture of the family circumstances of each deceased member. This allowed the Sub-committee to base its determinations on well-founded information.

Every effort is made to ensure that benefit amounts are distributed as quickly as possible and in the most fair and reasonable manner among those who depend the most on the member for their welfare. Unfortunately, in some of the neediest cases we sometimes find it the hardest to obtain the information we need to identify and trace the appropriate family beneficiaries. This scenario is most prevalent in cases where the deceased member, for whatever reason, has failed to supply his/her employer with an updated beneficiary nomination form and family dependency information.

We therefore ask our participating employers to help us to ensure that the objectives of their Sub-funds are met by asking their active members to provide annual nomination forms with full and accurate information on their dependants. Failing to do so contributes to delays in paying benefits which could result in financial hardship for a member’s loved ones in the event of that member’s untimely death.

Governance & Risks Sub-committee

This committee is required to provide the Board of Trustees with the regular assurance that the systems and processes implemented to monitor and ensure good governance, compliance and risk management are effective.

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To this end the Fund adopted and maintains a fund governance and risk management plan. This plan identifies the duties and responsibilities of the board and serves as a checklist and progress report. We are happy to report that the Fund meets its compliance requirements and is developing strategies to comply with all revised or proposed new requirements such as Regulation 28 reporting. Some of the key aspects monitored are listed below.

The Sanlam Umbrella Fund complies with all the requirements of PF 130, a good governance guide specifically prepared for retirement funds by the Financial Service Board.

The Fund is also in substantial compliance with the King III Code of Governance, a general governance benchmark against which companies and all other entities, such as retirement funds, should assess their level of governance. The Board adopted a charter on 24 February 2010 in which it resolved to apply the principles laid down in King III. In the compliance assessment conducted in July 2012 on the Governance Assessment Instrument of the Institute of Directors the Fund achieved the following ratings:

• Board composition: AAA

• Governance office bearers: AAA

• Remuneration: AAA

• Board role and duties: AA

• Accountability: AAA

• Board Committees: AAA

• Performance assessment: AAA

The Board adopted some 20 protocols which describe the principles and procedures underpinning certain decisions. Examples include protocols on the monitoring of contribution payments, trustee elections and trustee remuneration. All eight Sub-committees have agreed terms of reference and provide the Board with regular progress reports.

A Risk Management Schedule is maintained in which the top risks in the Sanlam Umbrella Fund (around 70 recorded) have been identified and quantified taking into account both the impact and likelihood. These

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risks are continuously reviewed and the top 10 are discussed at trustee meetings. These risks are currently within the risk appetite and tolerance levels agreed to by the trustees.

A formal assessment of the Board, the individual trustees, the officers, committees and service providers was once again undertaken in the first quarter of 2012. The results were very positive and no need for concern or corrective action was identified. There was no need to review the list of trustees available for re-election.

The committee also considers the complaints filed against the Fund in order to detect trends and areas of concern. Most of complaints received and filed with the adjudicator were administration-related enquiries that would normally have been dealt with by our admin complaints committee. No trends or issues have been detected requiring corrective action.

Based on these reports and control measures, the trustees are satisfied with the effectiveness of the system, the risk management process, the fund governance and compliance.

Insured Benefits Management Sub-committee

The insured benefits claims experience continues to be positive owing to the prudent management of pricing and risks so as to protect against anti-selection. This is positive for our members as a good claims experience mitigates against the risk of future premium rate increases. The Trauma Benefit is the one benefit where we have experienced a volatile claims experience, but this is not significant in relation to the whole risk pool.

The result of this cautious approach to risk management is reflected in the underlying premium rates charged by our two appointed insurers being Sanlam and Capital Alliance.

Insurance premium rates were reviewed as part of the 1 March 2012 annual revision exercise taking into account the experience of the Sanlam Umbrella Fund’s risk pool, employer-specific claims experience where applicable as well as anticipated future risk changes. The overall claims experience of the Sanlam Umbrella Fund continues to be good, and this has served to protect our members against insurance premium increases. We believe the ongoing close monitoring and interventions by the Insured Benefits Management

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Sub-committee plays a major role here. However, insurers also consider the claims experience across their entire business in reviewing their underlying insurance premium rates. Furthermore, because the demographics of each participating employer changed continuously, each participating employer would have experienced premium rate increases or decreases per risk benefit that were impacted by the actual change in his own membership demographics and risk profile (and own claims experience in the case of larger participating employers). The net change in premium rates across all benefits was limited to an average increase of 4.5%.

As part of the annual revision process, we obtained quotations for every risk benefit from the two appointed insurers being Sanlam and Capital Alliance. We also engaged with these two insurers to obtain the best possible rates for our clients per risk benefit. In cases where savings were identified by changing insurers, and where such a change was deemed in the best interests of the members, we made arrangements to change insurers.

Additional administration elements of the medical underwriting process was transferred from the insurers to the fund administrators at the end of 2011 in order to speed up the turn-around time of assessing members above the medical free cover limit and to reduce the paperwork and number of medical tests required.

The Sub-committee will continue to monitor the claims experience, and to engage with the trustees’ appointed insurers to optimise the insurance spend on behalf of our members.

Investments Sub-committee

The returns on behalf of our members have been very positive over the longer term despite the turmoil in financial markets caused by the worldwide economic crisis during 2008 and 2009. For example, our latest monthly report shows the following annualised returns over different periods ending 31 August 2012:

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12months 3years 5years

Multi-managerRange

SMM70Portfolio 18.4% 13.5% 8.2%

SMM50Portfolio 16.0% 13.0% 8.9%

SMM30Portfolio 15.0% n/a n/a

SMMAbsoluteReturnCPI+5%Portfolio 8.8% 9.6% 9.1%

SINGLEMANAGERRANGE

SIMBalancedFund 18.6% 14.0% 8.6%

SIMManagedModerateFundofFunds 16.5% 11.2% 9.1%

SIMInflationPlusFund 14.6% 11.2% 8.7%

SanlamCashFund 6.0% 6.6% 8.5%

ExternalSingleManagerRange

SanlamAllanGrayDomesticBalanced* 15.9% 14.9% 11.1%

SanlamAllanGrayGlobalBalanced* 17.2% 13.2% 10.3%

SanlamCoronationHouseview 18.5% 15.4% 10.9%

SanlamCoronationManaged 20.2% 15.8% 11.3%

SanlamOasisCrescent 13.2% 10.9% 6.1%

SanlamOasisGlobalBalanced 16.9% 12.2% 6.5%

InvestecBalancedFund 18.3% 13.4% 17.3%

SanlamFoordBalancedFund** 22.2% 15.3% 9.2%

Index-trackingRange

SIMEnhancedTrackerBalancedFund 19.7% 13.6% n/a

SmoothedBonusRange

SanlamMonthlyBonusFund 8.3% 8.7% 8.1%

SanlamStableBonusPortfolio 9.3% 9.8% 9.3%

*Only available to Sub-funds that had exposure to these portfolios prior to December 2009.** This portfolio will be available from 1 November 2012.

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Retirement fund investments is about adding long-term value to members,

and our focus remains on delivering inflation-beating returns over

the longer term. The inflation rate, as measured by the increase in the

Consumer Price Index, was slightly below 6.5% per annum over the five-

year measurement period. All the portfolios on the approved investment

menu comfortably beat inflation over this period.

Continued effort is being made, in conjunction with the Communication

Sub-committee, to issue regular and appropriate communication on

investment issues to our members.

The consolidated monthly Investment Fact Sheet offers the following

information to our members and consultants:

• The performance versus benchmarks of the trustee-approved default

investment strategies

• The performance versus benchmarks of all portfolios on the approved

member investment choice menu

• All investment fees.

This Sub-committee assisted the Communication Sub-committee with the

technical investment aspects involved in producing the 30 June 2011 and 31

December 2011 Investment DVDs.

The Investment Sub-committee conducted a comprehensive review of our

External Single Manager Range to enhance the overall value proposition to

our clients. This review also covers the following:

• The desire to offer a market-leading investment menu which takes

investment fundamentals into account

• The Code for Responsible Investing in South Africa (CRISA)

• Client and consultant feedback

• The desire to keep our investment menu lean and mean to contain costs

• The desire to simplify the menu and eliminate unnecessary duplication

• The desire to select managers that complement the other managers on

our menu.

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The following investment menu changes have been made as a consequence of this review:

• The Investec Balanced Fund was added to the menu as a new investment option in late 2011.

• The Sanlam Foord Balanced Fund will be added to the menu as a new investment option as from 1 November 2012.

• The two portfolio holdings managed by Coronation will be consolidated as from 1 November 2012. The Sanlam Coronation Managed portfolio will be merged into the Sanlam Coronation Houseview portfolio holding. The reason for this change is that the two portfolios are very similar and that the new portfolios now available to our members (these being Investec and Foord) offer a more differentiated choice. The Sanlam Oasis Global Balanced holding will be terminated as from 1 November 2012 and all moneys will be invested in the Sanlam Coronation Houseview portfolio (unless affected clients choose otherwise from the available menu of choices).

• The Sanlam Oasis Global Balanced holding will be terminated as from 1 November 2012 and all moneys will be invested in the Sanlam Coronation Houseview portfolio (unless affected clients choose otherwise from the available menu of choices). The Sanlam Oasis Crescent portfolio remains on the menu as our offering that conforms to Shari’ah Law.

• The closed group of participating employers with access to the Sanlam Allan Gray Domestic Balanced portfolio (only available to pre-December 2009 investors) will be given a once-off option to transfer these moneys and future contributions to the Sanlam Allan Gray Global Balanced portfolio as from 1 December 2012. This allows for direct offshore investment within this portfolio at the discretion of Allan Gray acting within the portfolio mandate including compliance with Regulation 28.

The Investment Sub-committee also focused on:

• Reporting changes required to comply with the new Regulation 28, and specifically how to implement these changes in the most cost-effective manner

• Reviewing the Lifestage Programme to introduce possible enhancements to this strategy during the second half of 2013

• Monitoring our appointment managers’ different approaches to the

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Code for Responsible Investing in South Africa (CRISA)

• Working with Sanlam Investment Management to further enhance the construction of the SIM Enhanced Tracker Balanced Fund which is a very important investment portfolio underlying the investments of our Passive Investor Strategy, and which also forms the key market-linked component of the Sanlam Futura investment strategy

• Monitoring developments in terms of retirement fund reform and specifically any possible future implications for the Sanlam Umbrella Fund’s investment strategy.

Rules RevisionEffective from 1 July 2009 the Board resolved to revise the Funds’ rules in order to make provision for legislative amendments, to align the rules with more desirable practices and to ensure operational efficiency. The revised rules of the Sanlam Umbrella Pension Fund and the Sanlam Umbrella Provident Fund were both formally registered by the Registrar of Pension Funds on 22 October 2009. Three subsequent rule amendments cover the following matters:

Amendment 1

• To permit those unusual situations when members and/or employers do not make contributions.

• To clarify the situation regarding insured benefits where a conversion option is applicable, but the member dies or becomes disabled before the option has been exercised.

• To provide for a paid-up benefit option on withdrawal.

• To allow for the deduction of administration costs from individual member accounts where these costs cannot otherwise be recovered.

• To reflect the various fee charging methodologies as contracted with clients.

• To empower the Fund to reduce termination fees if the trustees deem this necessary.

This amendment has been registered by the FSB and approved by SARS during 2011.

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Amendment 2

• To make it clear under the Provident Fund that the benefit at early retirement in good health before age 55 would be taxed as a withdrawal benefit

• To remove the unnecessary and onerous burden on the trustees of having to determine whether an employer has made a prima facie case against the member in terms of 37 D deductions.

The Sanlam Umbrella Pension Fund rule amendment was formally registered by the Registrar of Pension Funds on 28 November 2011 and approved by SARS on 19 June 2012. The Sanlam Umbrella Provident Fund rule amendment was formally registered by the Registrar of Pension Funds on 11 August 2011 and approved by SARS on 3 October 2011

Amendment 3

• To change payment method at death to lump sum first and annuities if chosen according to changes in tax legislation.

• To provide for the situation where administration and cost for risk can be waived during absence from service for contract workers.

The Sanlam Umbrella Pension Fund rule amendment was formally registered by the Registrar of Pension Funds on 6 September 2012. We are waiting for SARS approval. The Sanlam Umbrella Provident Fund rule amendment was formally submitted to the Registrar of Pension Funds on 24 August 2012, and we are waiting on registration and approval from SARS.

Sanlam Umbrella SolutionsSanlam Umbrella Solutions is the division within Sanlam responsible for ensuring that we have a highly competitive product providing true value for money to our members. This division is also responsible for ensuring the appropriate marketing and distribution infrastructures required to grow our membership base. Growth in our membership base will result in improved economies of scale, which in turn translates to an ever-improving value proposition for our members.

In January 2012 the full administration function, previously housed in the

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Retirement Fund Administration business unit, was transferred to Sanlam Umbrella Solutions. This allows for the alignment of the administrative services offered to members with the requirements of a growing Umbrella Fund.

The Board of Trustees is very pleased with the constructive and ongoing engagement with Sanlam Umbrella Solutions – a partnership based on transparency, trust and mutual respect. The Sanlam business strategy has been shared with the trustees, and we are comfortable with the goals that have been set, and thankful for the financial investment made by Sanlam Umbrella Solutions to grow our membership.

The results of the sponsor’s initiatives are evident, and we have achieved outstanding membership growth since the launch of the Sanlam Umbrella Fund. In a relatively short period, we have built a Fund that in mid-2012 comprises approximately 110 000 members and almost 2 500 participating employers with R7.7 billion in client assets under management.

Sanlam Employee Benefits Benchmark SurveySanlam Employee Benefits’ annual Benchmark Survey and Benchmark Symposium are widely recognised as leading sources of information on our industry.

We have undertaken three prior umbrella fund studies in 2009, 2010 and 2011. In each study, we surveyed 100 employers who participated in umbrella funds.

This year, we decided to analyse umbrella funds from a different perspective, namely that of the sponsoring company. Our thinking is that this should reveal new insights that were not apparent from our previous three studies – specifically the major challenges faced by umbrella fund sponsors and their views on the retirement fund reform process.

The umbrella fund study surveyed six major umbrella fund sponsors representing almost 800,000 members of more than 14,000 participating employers. It can therefore claim to be the most comprehensive survey yet of the commercial umbrella fund market.

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The 2012 Standalone Fund Survey yielded interesting indicators, for example: Members of bigger funds save nearly 1% of salary more than smaller funds towards retirement. This survey was conducted among 188 principal officers of standalone funds. Respondents were selected at random to represent small, medium, large and very large retirement funds.

Retirement Fund ReformOur clients will be aware that we place great emphasis on leading the South African retirement fund reform debate for the ultimate benefit of our members, and that we believe that commercial umbrella funds such as the Sanlam Umbrella Fund represent the future face of the retirement funds industry.

During November 2011, we became the first umbrella fund in the country to have a paper entitled A Critique of the Umbrella Retirement Fund Charging Model presented at the annual convention of the Actuarial Society of South Africa. We demonstrated the reduction-in-yield and charge ratios, and analysed these by term to retirement, salary bands and employer size to give the most transparent and meaningful insight into cost structures ever released in respect of the South African umbrella fund market. It was very rewarding when National Treasury quoted this work in its May 2012 paper entitled Strengthening Retirement Savings.

National Treasury has certainly kick-started the stalled retirement fund reform debate in 2012 with the release of the above-mentioned overview paper as well as the release during September and October 2012 of four technical papers entitled:

• Enabling a Better Income in Retirement

• Preservation, Portability and Governance for Retirement Funds

• Incentivising Non-retirement Savings

• Improving Tax Incentives for Retirement Savings.

Furthermore, the much-awaited Retirement Fund Costs technical paper is anticipated to be released before year-end.

National Treasury’s Dr David McCarthy was the keynote speaker on the subject of retirement fund reform at the 2012 Sanlam Employee Benefits

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Benchmark Symposium, and Kobus Hanekom (our Principal Officer) and David Gluckman (representing Sanlam) responded to the National Treasury thinking from the point of view of employers and commercial umbrella funds respectively.

The Sanlam Umbrella Fund is committed to monitor retirement fund reform developments closely as these unfold, and to take a leading role in the reform debates in order to protect the interests of our members.

Sanlam Futura Umbrella Retirement FundA specific challenge facing the retirement fund industry in the light of the Government’s retirement fund reform is how to provide cost-effective solutions for lower income earners.

The Sanlam Futura Umbrella Retirement Fund aims to provide a simple, cost-effective and administratively efficient retirement funding and insured benefits solution targeting lower income earners. It is an umbrella provident fund in which many employers and their employees participate in order to derive benefits from economies of scale. These cost savings ultimately translate into enhanced retirement pay-outs to members. It is a structure that enables employers to offer their employees packaged, flexible retirement savings and insured benefits.

The Fund in DetailThe Fund in Detail summarises the Sanlam Umbrella Fund product offering. A new version was released to all participating employers and consultants during January 2012. We urge our clients to familiarise themselves with this important document.

The January 2012 edition reflects exciting and innovative product enhancements particularly in terms of our investment offering. Many of these product enhancements are the direct result of feedback and ideas we have received from our supporting consultants, participating employers and Joint Forums.

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Annual Revision ProcessThe annual revision of all fees and insurance premiums took place on 1 March 2012.

This revision process was supported by extensive communication which involved all participating employers and their appointed Contracted Benefit Consultants. This communication exercise proceeded relatively smoothly. Where necessary, our Revisions team responded to all challenges that have arisen. We will take these experiences into account in planning the 2013 annual revision exercise – it is always possible to improve on client service delivery. We would like to thank our participating employers and Contracted Benefit Consultants for the professional manner in which they contributed to the success of this project.

We are very pleased that the Sanlam Umbrella Fund continues to demonstrate tremendous value add to our participating employers and members. Sanlam’s administration fees on average increased by 3.7% which is below the official inflation rate as measured by the Consumer Price Index. No change was made to the contingency reserve account levies which remain at one-third of the quantum that applied in 2008.

Although this average experience is very encouraging, it is important to note that participating employers will experience either increases or decreases depending upon their unique circumstances and in particular changes in their membership and fund design since the previous revision. The underlying principle is that we apply consistent formulae across the entire Sanlam Umbrella Fund in terms of every fee and risk premium. Hence, we try as best as possible to be fair to all our members and participating employers, and to charge fees that reflect the actual workload and actual underlying insurance risks.

Administration fees do not include the normal costs and disbursement incurred by the Fund such as FSB levies and fees, fidelity insurance premiums, actuarial, audit, independent trustees, member communication and other fees and disbursements. These fees are recovered from the contingency reserve account.

Client fees and insurance premiums are due for revision on 1 March 2013, although clients still within the 12-month guarantee period applicable to new business will not be revised then.

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Our Consulting ModelThe Sanlam Umbrella Fund operates by way of an intermediated model whereby FAIS-accredited consultants provide valuable services to participating employers and members, and form an essential part of the overall value chain.

We have tried to lead the industry by defining exactly what services are expected by the Sanlam Umbrella Fund trustees from the Contracted Benefit Consultants and Contracted Financial Advisers. We have also implemented a remuneration model whereby consultants are contracted to provide these specified services and are paid a monthly consulting fee for delivering such services. We believe this is an appropriate and sustainable business model to deliver true value for money to members.

The trustees wish to thank all our supporting intermediaries for their hard work and dedication over the past year. The ongoing support of these consultants has played a major role in our membership growth and client service delivery.

Joint ForumsJoint Forums are designed to facilitate the process of consultation and decision making between participating employers and their employees in respect of their group retirement benefits within the spirit of the Labour Relations Act.

A significant amount of work has gone into designing appropriate material for discussion and review at Joint Forum meetings. The emphasis is still on training Contracted Benefit Consultants to run Joint Forum meetings, and on creating the infrastructure whereby meaningful communication can be delivered to our members in a cost-effective manner. To this end, the sponsor has invested a huge effort during 2012 to develop enhanced Joint Forum reporting functionalities to assist Contracted Benefit Consultants in delivering this service, and this will be rolled out in the beginning of 2013.

Our Joint Forum model is constantly evolving. Our challenge is to find a more cost-effective and meaningful communication process for South African standalone funds – one that better meets the real needs of members.

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We are immensely proud of the pioneering and industry-leading position that the Sanlam Umbrella Fund has taken in terms of Joint Forums. We hope that we are on the right path to find a model that truly works for South Africa and that appropriately addresses the criticisms that have historically been levelled at many other umbrella funds.

We would like to all stakeholders to know that we have designed a standard Joint Forum meeting pack for discussion with participating employers and member representatives. Contracted Benefit Consultants will find the latest versions in the monthly edition of the Consultant Tool Kit. Of course, as appropriate, Contracted Benefit Consultants might prefer to customise the meeting reporting as is appropriate for their clients.

Industry AwardsWe are very proud that Sanlam Employee Benefits continues to be recognised as leaders in the industry, as the additional four awards accumulated in 2012 confirm. This brings the total industry awards in three years to six:

• The Financial Intermediaries Association Award for Employee Benefits Supplier of the Year 2011 & 2012

• The Principal Officers Association Imbasa Yegolida Award for the Umbrella Fund of the Year 2010 & 2011

• The Principal Officers Association Imbasa Yegolide Award for Actuarial Firm of the Year 2012 won by our consulting business, Simeka Consultants & Actuaries

• The Institute of Retirement Funds Communication Challenge Award in the Umbrella Funds Category 2012

• The PMR Golden Arrow Award 2012 for excellent retirement fund administration in the City of Cape Town and Cape Peninsula Survey

• The PMR Golden Arrow Award 2012 for excellent retirement fund administration in the Boland Survey.

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Annual General MeetingThe trustees resolved during 2010 to expand the AGM to better communicate with our clients in the KwaZulu-Natal and Eastern Cape regions as opposed to only Gauteng and the Western Cape in prior years. This decision was made taking into account our expanding client base in these regions, which made this enhancement a cost justifiable decision.

The 2011 AGM of the Sanlam Umbrella Fund was held on 7 September 2011 (Cape Town), 8 September 2011 (Johannesburg), 13 October 2011 (Durban) and 18 October 2011 (Port Elizabeth). The AGM was attended by 231 people in total (significantly up from 115 attendees in 2009). The AGM comprised a full and meaningful agenda including formal presentations on retirement fund reform, the sponsor’s plans, the trustees’ progress review, the Fund’s communication model and a panel discussion where members had the opportunity to put questions to the Fund’s trustees.

The 2012 AGM will be held on 30 October 2012 (Johannesburg) 31 October 2012 (Cape Town), 20 November 2012 (Durban) and 21 November 2012 (Port Elizabeth). Participating employers, Contracted Benefit Consultants and member representatives are all welcome to attend the AGM, and should respond to the AGM formal invitation (detailing the meeting agenda) which is being distributed via e-mail. The AGM is our clients’ opportunity to meet directly with the Sanlam Umbrella Fund trustees and officials. We sincerely hope that attendance will be even higher than in 2011, following the successes we have had in steadily increasing the AGM attendance in every year since our first AGM in 2007.

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In Conclusion …We trust that it is evident from all of the above that we remain committed to continuously improve the Sanlam Umbrella Fund offering for the ultimate benefit of our members.

We are proud of all we have achieved over the review period and during the past few years. Our vision, namely to establish the Sanlam Umbrella Fund as the recognised premier retirement fund in the country, is fast becoming a reality. This is also confirmed by the growing list of Industry Awards.

The Board of Trustees wishes to thank all our stakeholders for their role in our progress to date. We thank the sponsor, our administrators, our Principal Officer and Fund Secretariat, our Sub-committees, our supporting intermediaries and all our other service providers. Most of all, we thank our participating employers and members who have entrusted so much of their financial security into our hands.

Issued by the Sanlam Umbrella Fund Board of Trustees October 2012

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Derek Smorenburg (Chairman)

Ian McDonald

Phelisa Ngonyama

Dalene Willemse

Marius Jönas

Alex Paterson

Kobus Hanekom (Principal Officer)

Erina le Grange (Fund Secretary)

Board of Trustees, July 2012

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General Fund Information (Based on Schedule A of the financial statements)

Regulatory Information

Statutory Alternatives Fund StatusRegistered Name Sanlam Umbrella Pension & Provident

Funds

Registered as a Umbrella Pension, and Umbrella Provident Funds (identical Benefit and Management structures )

Umbrella Sponsor Sanlam Umbrella Solutions

Pension Fund’s registration and approval dates

19/09/2001 06/02/2002

Pension Fund’s registration and approval numbers

12/8/36828 18/20/4/41146

Provident Fund’s registration and approval 19/09/2001 06/02/2002

Provident Fund’s registration and approval numbers

12/8/36813 18/20/4/41147

Funding Model Defined Contribution Funds

The fund’s anniversary date and financial year-end is

1 January 2008

The fund’s financial reporting period is From 1 January to 31 December

Fund exemptions Valuation exempt, not audit exempt from I January 2008. (Received permanent/full valuation exemption for Pension Fund and Provident on 2 February 2012).

The fund’s registered address is: Postal address

PO Box 1, Sanlamhof, 7532

The fund’s registered address is: Physical address

2 Strand Road, Bellville, 7535

Separate bank accounts are being maintained for each fund

Pen: ABSA Arcadia Acc 4067972456Prov: ABSA Arcadia Acc 4067972383

Board of Trustees

Full name M/E Date appointed End of termDerek Smorenberg Sponsor Chairperson 1 July 2007

1 August 200931 December 2012*

Marius Saayman Sponsor alternate 1 July 20071 August 2009

31 December 2012*

Marius Jonas Sponsor 1 August 2009 31 December 2012*

Phelisa Ngonyama Sponsor 1 February 2011 31 December 2012*

Dalene Willemse Independent 1 July 20071 August 2009

31 December 2012*

Ian McDonald Independent 1 July 20071 August 2009

31 December 2012*

Annexure A

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Full name M/E Date appointed End of termAlex Paterson Independent 1 August 2009 31 December 2012*

Henry Dul Independent alternate 1 August 2009 31 December 2012*

Fund Officers

Principal Officer Responsible personFull name: Kobus Hanekom Erina le Grange

Company Simeka Sanlam Umbrella Solutions

Postal address: PO Box 350, Sanlamhof, 7532 PO Box 1, Sanlamhof, 7532

Physical address: Simeka House, Farm 2, Vineyards Office Estate99 Jip de JagerBellville7535

2 Strand RoadBellville

Telephone number: (021) 912-3311 (021) 947-6504

Email address: [email protected] [email protected]

*(In terms of Section 13A of the Pension Funds Act)

Professional service providers’ information(Indicate the date of appointment/resignation of any service provider during the reporting period)

Statutory appointments

Actuary: ad hoc appointment only

Independent external Auditor

Full name: Louis Quintal

Company RSM Betty & Dickson

Postal address: PO Box 1734, Randburg, 2194

Physical address: Cross Street & Charmaine Avenue, President Ridge, Randburg, 2194

Telephone number: (011) 329-600

Email address: [email protected]

Administrator Back Office Front OfficeResponsible person Ilizma De Kock Erina le Grange

Company Sanlam Umbrella Solutions Sanlam Umbrella Solutions

Postal address: PO Box 1, Sanlamhof, 7532 PO Box 1, Sanlamhof, 7532

Physical address: 2, Strand RoadBellville7535

2 Strand RoadBellville7535

Telephone number: (0210 947-4600 (021) 947-6504

Email address: [email protected], [email protected]

Reg number: S13B / FAIS

Registration number: 2485

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Secretariat Product development/sponsorResponsible person Erina le Grange Mike O’Donovan

Company Sanlam Umbrella Solutions Sanlam Umbrella Solutions

Postal address: PO Box 1, Sanlamhof, 7532 PO Box 1, Sanlamhof, 7532

Physical address: 2 Strand Road Bellville7535

2 Strand RoadBellville7535

Telephone number: (021) 947-6504 (021) 947-1125

Email address: [email protected] [email protected]

Reg number S13B / FAIS

NA

Consultants Specialist Investment Consulting

Governance & Compliance

Responsible person Marcus Rautenbach Kobus Hanekom

Company Simeka Simeka

Postal address: PO Box 787439, Sandton, 2146 PO Box 350, Sanlamhof, 7532

Physical address: 4th Floor Office TowerSandton City2143

Simeka House, Farm 2, Vineyards Office Estate99 Jip de JagerBellville7535

Telephone number: (011) 263-4343 (021) 912-3311

Email address: [email protected]

[email protected]

Reg number FAIS Simeka FAIS Licence No. 13900 Simeka FAIS Licence No. 13900

Reinsurers Underwriting Insurer Underwriting InsurerResponsible person Chris Cook Janine Barnes

Company Sanlam Capital Alliance

Postal address: PO Box 1, Sanlamhof, 7532 PO Box 10499, Johannesburg, 2000.

Physical address: 2 Strand Road, Bellville, 7535 3 rd Floor Libridge Building, 25 Ameshoff Street braamfontein, Johannesburg, 2017

Telephone number: 021 947 2456 (021) 526-1395

Email address: [email protected] [email protected]

Reg number S13B 1998/021121/06

Type of risk Group Life, Disability, Funeral, Accident, Spouses and Trauma Assurance

Group Life, Disability, Funeral, Spouses and Trauma Assurance

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Sub-committees

Subcommittees Members1 Administration Sub-committee Mike O”Donovan - Chairperson, Erina le Grange,

Derek Smorenberg

2 Death Benefits Sub-committee Ian McDonald - Chairperson, Linda Puccini, Erina le Grange

3 Audit Sub-committee Marius Saayman - Chairperson. Mike O’Donovan, Erina le Grange, Kobus Hanekom

4 Investments Sub-committee David Gluckman - Chairperson, Derek Smorenberg, Marius Saayman, Marius Jonas

5 Complaints Sub-committee Kobus Hanekom - Chairperson, Erina le Grange, Dalene Willemse

6 Member Communication Sub –committee

Dalene Bennett –chairperson, Kobus HanekomErina le Grange, Marius Jonas, Derek Smorenburg

7 Risk and Governance committee

Kobus Hanekom-chairperson, Erina le Grange, Marida Botha

8 Insured Benefits Management Mike O’Donovan-chairperson, David Gluckman, Beulah Battle, Marius Jonas, Chris Jacobs

9 Selection committee:Independent trustees

Kobus Hanekom, Erina le Grange, David Gluckman, Mike O’Donovan, Derek Smorenberg, Marius Jonas, Alex Patterson

10 The minute book and the fund register is • kept at • maintained by

Sanlam Umbrella Solutions, Sanlam Head Office, BellvilleErina le Grange (fund Secretary)

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Annexure B

Sanlam Umbrella FundName of Trustees Derek Smorenburg Marius Jonas Phelisa Ngonyama Ian McDonald Dalene Willemse Alex Paterson

Appointment Term 01/08/2009 – 2012 01/08/2009 – 2012 01/02/2011 – 2012 01/08/2009 – 2012 01/08/2009 – 2012 01/08/2009 – 2012

Compliance with Trustee Training Protocol Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant

Compliant with Governance Procedures (PF130) Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant

Sponsor Appointed Yes Yes Yes

Member Elected Yes Yes Yes

Status relative to the Sponsor Non-ExecutiveEntrepreneur who sold umbrella business to Sanlam.

Non-ExecutiveEntrepreneur who sold umbrella business to Sanlam.

Executive/employed by Sanlam

Independent Independent Independent

Trustee Fee Contracted and remunerated by the Sponsor

Contracted by the Sponsor. Agreed trustee fee

Employed and remunerated by Sanlam

Agreed trustee fee Agreed trustee fee Agreed trustee fee

Performance Assessment: 26 March 2012 exceeds job requirements

exceeds job requirements

meets job requirements exceeds job requirements

exceeds job requirements

exceeds job requirements

Attendance of Trustee Meetings19 October 2011 Yes Yes Yes Yes Yes Yes

26 March 2012 Yes Yes No Yes Yes Yes

20 June 2012 Yes Yes Yes Yes Yes Yes

Attendance of Strategy Session Yes Yes Yes Yes Yes Yes

Attendance of 2011 AGM (Cape Town & Gauteng) Yes Yes Yes Yes Yes Yes

Agreed Trustee Fee:

The standard trustee fee payable in respect of the meetings of the 5 related funds (8:30 to 17:00) is R19 687 plus VAT (Sanlam Umbrella R12 127, Futura R  4 410, Sanlam Plus R  3 150). Accommodation and transport costs are for the trustee’s own account. The attendance fee is 50% of the agreed fee. Fees for the attendance of the AGM are R6 615 plus VAT and travel costs. Sub-committees participation and additional research is remunerated at an hourly fee of R1 102. This is a very small percentage of the fees paid to independent trustees.

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Sanlam Umbrella FundName of Trustees Derek Smorenburg Marius Jonas Phelisa Ngonyama Ian McDonald Dalene Willemse Alex Paterson

Appointment Term 01/08/2009 – 2012 01/08/2009 – 2012 01/02/2011 – 2012 01/08/2009 – 2012 01/08/2009 – 2012 01/08/2009 – 2012

Compliance with Trustee Training Protocol Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant

Compliant with Governance Procedures (PF130) Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant Fully compliant

Sponsor Appointed Yes Yes Yes

Member Elected Yes Yes Yes

Status relative to the Sponsor Non-ExecutiveEntrepreneur who sold umbrella business to Sanlam.

Non-ExecutiveEntrepreneur who sold umbrella business to Sanlam.

Executive/employed by Sanlam

Independent Independent Independent

Trustee Fee Contracted and remunerated by the Sponsor

Contracted by the Sponsor. Agreed trustee fee

Employed and remunerated by Sanlam

Agreed trustee fee Agreed trustee fee Agreed trustee fee

Performance Assessment: 26 March 2012 exceeds job requirements

exceeds job requirements

meets job requirements exceeds job requirements

exceeds job requirements

exceeds job requirements

Attendance of Trustee Meetings19 October 2011 Yes Yes Yes Yes Yes Yes

26 March 2012 Yes Yes No Yes Yes Yes

20 June 2012 Yes Yes Yes Yes Yes Yes

Attendance of Strategy Session Yes Yes Yes Yes Yes Yes

Attendance of 2011 AGM (Cape Town & Gauteng) Yes Yes Yes Yes Yes Yes

Annual Assessment of the board, subcommittees and service providers

Entity assessed Rating 1 The Board exceeds job requirements

2 Chairman exceeds job requirements

3 PO exceeds job requirements

4 Fund Secretary exceeds job requirements

5 Administration Sub-committee exceeds job requirements

6 Death Benefits Sub-committee exceeds job requirements

7 Audit Sub-committee exceeds job requirements

8 Investments Sub-committee exceeds job requirements

9 Complaints Sub-committee exceeds job requirements

10 Member Communication Sub –committee exceeds job requirements

11 Risk and Governance committee exceeds job requirements

12 Investment consultant exceeds job requirements

13 Administrator meets job requirements

14 Benefit Consultant exceeds job requirements

15 External auditor exceeds job requirements

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Notes