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FAIRHEADS UMBRELLABENEFICIARY FUND
THE SUPER BENEFICIARY FUND
The Fairheads Umbrella Beneficiary Fund is the flagship product of Fairheads BenefitServices, Southern Africa's leading independent service provider for beneficiary funds andumbrella trusts.
The Fund was the first beneficiary fund to be registered in South Africa and with over R1billion in assets under administration, it is a super beneficiary fund favoured by clients for:
• member-centric service
• benefits of scale
• best of breed investment strategy and managers
• bespoke technology
• experienced trusteeship
• strong governance
• effective member communication.
THE SUPER BENEFICIARY FUND 1
Message from the Chairpersonof the Board of Trustees
On behalf of the Board of Trustees of the Fairheads Umbrella Beneficiary Fund, I ampleased to confirm that the information contained in this product brochure is accurateand fairly represents the spirit and objectives of the Fund. Beneficiary funds play a vitalsocial role in our society and we believe that through this Fund we have struck the rightbalance between good governance, fair pricing and the essential ingredients of compassionand care in the service that we offer.
ROBYN COWIE
Chairperson
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MORE ABOUT US
Fairheads Umbrella Beneficiary Fund has a long tradition of highly personalised servicebased on caring trusteeship, excellent administration and a conservative, tailored approachto investment management.
Fairheads Benefit Services (Pty) Ltd is an authorised financial services provider and 13Blicensed administrator. We apply our leading-edge technology and expertise to beneficiaryfunds and umbrella trusts. We are committed to corporate transformation, enterprisedevelopment and maintain a Level 2 B-BBEE scorecard.
The member is at the heart of all that we do. This is why we measure service delivery interms of real improvements in their lives, be these educational, general well-being or socialoutcomes.
We also recognise that retirement fund trustees carry a responsibility for ensuring thatmembers are serviced appropriately. We therefore have a responsibility to communicate,educate and build lasting relationships with our corporate clients.
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TRUSTEES
INTERMEDIARIES
EMPLOYERS
GUARDIANS
AND CAREGIVERS
MEMBERS
HOW IT WORKS
The Fairheads Umbrella Beneficiary Fund can receive:
• section 37C death benefits (approved benefits) from a registered retirement fund for thebenefit of a dependant or nominee. This can be for a minor or major (with consent) ifconsidered appropriate by the retirement fund trustees.
• benefit payments from unapproved funds e.g. group life cover and employment benefits.
A member account is set up on completion of an application form, together with paymentand required supporting documents.
Regular payments are made to guardians/caregivers to cater for the minor’s general well-being on a monthly, quarterly or annual basis. The amount paid is determined by theindividual needs of the minor, as well as the amount available in the member account.
Special financial assistance payments can be requested by guardians/caregivers to payfor specific once-off or annual expenses such as educational or medical expenses.
Member accounts are generally terminated when the member reaches the age of majority.The option to leave the money in the fund is available, and we encourage members toseek independent, financial advice prior to taking their funds.
Guardian/caregiver and member requests are managed according to agreed service levelagreements, which include documented escalation procedures if they are not satisfied thatthe request is being managed properly.
TAX EFFECTIVE
A beneficiary fund has significant tax benefits. No tax is paid in the fund and furthermoreany payment out of the Fund, whether capital or income, is tax free.
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PEOPLE CARING FOR PEOPLE
Administration is our core service, with over 25 years of experience. Our administrationteam is based in Cape Town, with an average of 10 years of experience. Our administratorsare chosen not only for their technical skills, but also for their compassion and understandingof human issues.
We have a dedicated inbound and outbound multilingual contact centre which is integratedinto the administration system, allowing our people to respond to queries in real-time.
Fairheads walk-in centres in Johannesburg, Durban and Cape Town allow for face-to-facecontact and counseling to members and guardians, and we have partnered with a numberof like-minded service providers around South Africa and in neighboring countries whereguardians/caregivers and members can access information and lodge forms and requests.
The Fund’s communication strategy sets out certain minimums in line with PF130. We gobeyond the circular’s requirements and are proud to have pioneered regional roadshowsin Southern Africa, bringing grass-roots knowledge and understanding to thousands ofguardians/caregivers and members every year.
Members and guardians/caregivers receive the following plain language reports:
• a member guide
• annual member financial statements
• annual tax information, where applicable
• annual certificates of existence
• investment reports
• annual member newsletters.
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CONSULTING AND TRAINING
At the corporate level, consulting and training are part of our service. A team of consultantsare dedicated to servicing the needs of retirement funds and employer groups. They canprovide reporting, training or ad-hoc information to boards of trustees on beneficiary fundsand death claims.
Consultants and retirement fund trustees can access a range of reports, either directlyfrom one of our consultants or through our online corporate portal. These reports include:
• fund registers and member statistics (on request)
• exception reports on request (overdue terminations, suspended income)
• financial statements
• quarterly investment reports
• newsletters and technical updates
Tools
Fairheads has developed a series of tools to help fund trustees when dealing with section37C benefits. These include a Guardian Assessment questionnaire to assess guardianfinancial literacy, as well as a calculator to assist in determining the regular incomepayments.
Intermediaries
We offer training on products for financial advisers and intermediaries.
Industry input
Our dynamic consulting team, headed by Giselle Gould, is well respected in the industryfor its input into legislative and regulatory processes and we have helped shape thelandscape of the beneficiary fund legislative environment.
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GOVERNANCE
The Board of Trustees
The board of the Fund is made up of an independent professional trustee and an independentprincipal officer. The independent trustee is a qualified attorney with the law firm BowmanGilfillan and the principal officer also acts in this capacity on a number of large well-knownretirement funds.
The Fund has a complaints resolution policy which complies with FAIS and pension fundlegislation.
The Fund is subjected to an annual audit by independent auditors, KPMG.
The administrator
Fairheads Benefit Services (Pty) Ltd has a 13B administration licence in terms of thePension Funds Act. Among other committees the administrator has an internal audit, riskand compliance committee which monitors adherence to the risk management policy. Acompliance report is submitted to the FSB annually in line with legislative requirements.
Both the compliance and internal audit divisions monitor compliance with legislation andservice level agreements, whilst internal audit also focuses on risk management.
The custom built, bespoke administration system is fully supported by a comprehensivedisaster recovery plan.
In addition to the administrator carrying comprehensive cover, it is also a requirement ofthe Pension Funds Act that the Fund carries sufficient fidelity cover.
THE SUPER BENEFICIARY FUND 13
CONSERVATIVE INVESTMENT STRATEGY
The Fund has an investment policy statement which is reviewed regularly by the trustees and the independentasset consultant.
Independent investment managers are appointed by the Fund trustees. Their performance is monitored andreported on a quarterly basis.
Given the fiduciary nature of the service, the investments are managed on a conservative basis in line withRegulation 28. The primary objectives are:
• provision of liquidity for regular and ad hoc payments
• preservation of capital with a low-risk profile.
Together with the asset consultant, Fairheads has developed a unique asset allocation model which takes intoaccount the member’s age, value of funds and income (regular payment) requirement. Each age group has itsown life-stage model similar to a retirement fund.
Members are invested in a combination of the following investment vehicles, depending on their asset allocation.
Call DEPOSITS. The Standard Bank Institutional Money Market Proposition is a registered collectiveinvestment scheme. A percentage of funds are required to be held short term for liquidity.
Income funds. The investment objective is to maximise income by achieving returns in excess ofthe money market and interbank call rate while maintaining a high degree of liquidity and capital preservation.The income fund was split between two managers during the course of 2013 to achieve further diversificationof the portfolio. The portfolio is split between the Prescient Income Provider Fund and the Coronation StrategicIncome Fund, both of which are registered collective investment schemes.
Stable Funds (Low Equity Multi-Asset class). The investment objective is to providean increased exposure to capital growth for members with a suitable medium to longer term investment horizonwhile maintaining a focus on capital preservation/protection over the short term.The Stable Fund should aim todeliver long term capital appreciation in combination with reduced short term volatility.
The portfolio is split between the Prudential Inflation Plus CPI+5% Fund and the Coronation Balanced DefensiveFund, both of which are registered collective investment schemes.
BALANCE FUND. Following the principle that younger members with higher fund credits will have arelatively higher exposure to equities, the Coronation Balanced Fund is utilised where certain criteria are met.These criteria are based on the amount of capital available and the investment time horizon. The balanced fundhas a prudential mandate to achieve long-term capital growth within an environment of moderate risk.
Current account. The Fund has its own account with First National Bank. All receipts and paymentsare processed through this account and the administrator has negotiated competitive interest rates and bankcharges.
An investment reblend is conducted annually for each member and adjustments are made accordingly.
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FEES
The adage that you get what you pay for has never been as apt as it is for beneficiaryfunds.
The Fairheads Umbrella Beneficiary Fund strives to deliver genuine and meaningfulbenefits to members through our tailored approach to fund administration.
With the highest staff to member ratio in the country we actively engage with guardians,caretakers and members to ensure that they achieve the best possible outcomes.
Key to this is our complete independence from the investment houses which manage ourmembers’ funds. The board of trustees is unhindered in seeking out best of breed investmentmanagers.
Our approach to fees and charges is characterised by complete transparency on all costs,with an emphasis on adding value to the lives of our members.
FAIRHEADS CONTACT CENTRE0860 102 919 [SHARE CALL]
CAPE TOWN15th Floor, 2 Long Street
Tel +27 21 410 7500 I Fax +27 21 410 7995
Email [email protected]
SANDTON2nd Floor, Block A, Sandton Close 2
Cnr Norwich Close & Fifth StreetTel +27 11 883 9755 I Fax +27 11 883 4791
Email [email protected]
JOHANNESBURGGround Floor, 45 Commissioner Street
Tel +27 10 100 3316/7/8/9 I Fax +27 86 5464 511/054Email [email protected]
DURBAN23rd Floor, Office No. 2304
199 Smith Street, Embassy BuildingTel +27 31 368 9260 I Fax +27 31 368 9270
Email [email protected]
www.fairheads.com
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