1

Gauteng Building Industry Retirement Fund Annual

Trustees’ Report at 31 March 2015

10279-GBI TR 2015-05 .indd 1 2015/05/05 2:57 PM

1

What if there’s more to retirement than just getting by without needing anything from anyone? What if you could fulfi l at least one of your lifelong dreams?

Think of your retirement as a gift to yourself for working so hard for so long. What is the one thing you would want to do? If you could, would you sail the world or buy a house at the coast? Would you open a small restaurant in a small town or take up fi shing? The options that await you are endless but depend on your fi nancial plan.

Start by dreaming big. Have something worthwhile to aim towards – something that matters enough to you to get you to save.

Work with a fi nancial adviser to help you make the right choices today so that you can fulfi l your dreams tomorrow.

10279-GBI TR 2015-05 .indd 2 2015/05/05 2:58 PM

2

FUND MATTERS

Benefi t statementsEvery year you receive a benefi t statement detailing the contributions paid to the fund on your behalf and the values of your withdrawal, death, disability and retirement benefi ts at the date of the statement. You can use the information on these benefi t statements to make sure you’re on track for the retirement you want. Check your details carefully and let your payroll administrator know if there are any changes.

Your board of trusteesA board of trustees manages your retirement fund. Your employer chooses the employer-appointed trustees, while you, the members, choose the member-elected trustees.

The current board of trustees’ term of offi ce expires at the end of December 2015.

The trustees have a duty to:• take reasonable steps to make sure your interests in the fund are always protected• act with care, diligence and in good faith• act with fairness towards all members and benefi ciaries• make sure you get the right information at the right time.

The following trustees make up your retirement fund’s board:

Independent trustee Ms L Khangala

Chairperson Mr N Moloto

Principal offi cer Mr N Duncan

Employer-appointed trustees Member-elected trustees

Mr L SmithMr M MphomelaMr W SoutterMr C Schmidt

Mr M de CastroMr E KojiMr A VukaphiMr N Moloto

10279-GBI TR 2015-05 .indd 3 2015/05/05 2:58 PM

1

YOUR FUND’S SERVICE PROVIDERSThe trustees appointed the following companies to help manage your fund:

Service Provider Function

Actuaries and consultants Alexander Forbes Financial Services (Pty) Ltd

These are the mathematical and financial experts who perform the necessary calculations, such as benefit calculations, and who also make sure that the fund is in a sound financial position.

Administrators Alexander Forbes Financial Services (Pty) Ltd

The fund’s administrators handle all the day-to-day administrative duties of the fund. They make sure contributions are received on time, benefits are paid out, new members are registered, and so on.

Auditors Deloitte & Touche The auditors examine the fund’s financial statements once a year to make sure the fund’s financial situation is above board and that the information reported in the financial statements is correct and accurate.

Investment consultants Alexander Forbes Asset Consultants

These are the specialists who invest members’ contributions according to the fund’s investment strategy. The aim is to grow members’ contributions over the long term.

Bankers Standard Bank of South Africa

This is the bank where the fund holds its accounts, from which, and into which, fund money is paid.

Risk insurance Guardrisk and Sanlam This is where insurance for disability, death and funeral benefits is placed.

MEMBERSHIP DETAILS

Fund benefitsDeath and permanent disability

The following table shows you the membership movements for the year under review:

Provident Pension

Active members as at 1 January 2014 4 757 9 382

New members 364 281

Less:

Withdrawals 256 249

Retrenchments 151 138

Adjustments 70 20

Retirements 76 228

Deaths 25 44

Active members as at 31 December 2014 4 543 8 984

Total and temporary disability benefit

Up to R25 000 per year = R75 000 plus fund credit

R25 000–R40 000 per year = R112 500 plus fund credit

R40 000 per year or more = R150 000 plus fund credit

Funeral Benefit

Member and spouse R10 000

Children (14–21 years) R10 000

(1–13 years) R6 000

(stillborn–11 months) R6 000

10279-GBI TR 2015-05 .indd 4 2015/05/05 2:58 PM

Divorce ordersThe trustees caution you as a member of the fund against any fraudulent divorce claims to gain access to your funds. Note that if you or any other members of the fund are found to have divorced to gain access to your funds, you could face disciplinary actions, which could lead to dismissal from your job.

Home loansYou are also reminded as a member that if you wish to apply for a home loan to build, extend or renovate your home for your family, you may make an application to Absa for the loan to be issued. The granting of the loan will depend on your income and affordability. This loan will be secured by your fund credit in the provident section of the fund. For further details please contact your human resources department.

Your fund’s investment performance – 31 December 2014All the money in the fund makes up the fund’s assets. To make the fund’s assets grow, your trustees appoint investment managers to invest the money. If markets perform well, the fund’s assets can earn good investment returns but if the markets perform poorly, the investment returns earned can be poor and you could lose money in the short term. However, remember that retirement saving is a long-term investment.

The following table gives you the gross returns relative to benchmark to 31 December 2014:

Gauteng Building Industries Pension Fund

ManagerMarket value R million

Performance (%) to September 2014

1 month 3 months 12 months 3 years 1

Absolute return funds

Real Return Focus 426.7 0.92% 2.32% 9.80% 11.27%

Benchmark (CPI + 5%) 0.24% 1.23% 10.03% 10.38%

Hedge funds

Blue Ink Capital Meteor Fund 94.1 0.61% 1.69% 7.97% 8.47%

Benchmark (Cash + 4% per year) 0.79% 2.38% 9.57% 9.28%

Caveo Stable 3 3.0 -2.01% -0.17% 5.91% 8.33%

Benchmark (CPI + 3%) 0.07% 0.74% 8.31% 8.47%

Brait Multi Strategy Fund 33.8 1.92% 5.49% 21.31% 10.27%

STeFI 0.56% 1.55% 5.90% 5.55%

Equity and listed property

Investec Property Equity Life Fund 242.7 3.40% 12.11% 29.35% 26.11%

Stanlib 80.5 1.68% 11.44% 27.49% 24.02%

Benchmark (SA Listed Property Index) 1.11% 11.08% 26.64% 23.09%

RMB 4 26.0 - - - -

Investec 4 112.7 - - - -

Absa 4 175.3 - - - -

GBI Pensioner Growth 48.8 1.73% 6.98% 18.93% -

Socially responsible investment

Futuregrowth Infrastructure Bonds 41.8 -1.05% 3.94% 12.50% 11.84%

Benchmark (Albi) -1.55% 4.25% 10.15% 8.74%

Sakhisizwe 43.0 0.48% 2.58% 11.66% 10.88%

Benchmark (composite) 2 -0.25% 2.43% 10.31% 11.66%

Liability-driven investment

Colourfield 804.4 - - - -

Total fund

Total fund 5 2 132.8 1.45% 5.47% 17.93% 15.60%

Benchmark (CPI + 4%) 0.15% 0.99% 9.03% 9.38%

10279-GBI TR 2015-05 .indd 5 2015/05/05 2:58 PM

1

Notes: 1 All three-year and five-year returns are annualised. 2 The Sakhisizwe benchmark is a composite benchmark made up of:

Index Weighting

Swix 20%

CPI + 6% 30%

CPI + 4% 20%

Albi 30%

3 The returns for Caveo Stable are a composite of the Caveo Moderate and Stable portfolios as a switch was made in 2011. 4 Equity Linked Notes are held with RMB, Investec and Absa. A table of implementation dates can be found on page 3 of the report.5 The total fund returns do not include the Colourfield.

Gauteng Building Industries Provident Fund

ManagerMarket value R million

1 monthPerformance (%) to September 2014

3 months 12 months 3 years 1

Absolute return fundsReal Return Focus 124.7 0.92% 2.32% 9.80% 11.27%Benchmark (CPI + 5%) 0.24% 1.23% 10.03% 10.38%

Hedge funds

Blue Ink Capital Meteor Fund 7.8 0.61% 1.69% 7.97% 8.47%

Benchmark (Cash + 4% per year) 0.79% 2.38% 9.57% 9.28%Caveo Stable 3 3.9 -2.01% -0.17% 5.91% 8.33%Benchmark (CPI + 3%) 0.07% 0.74% 8.31% 8.47%Brait Multi Strategy Fund 3.9 1.92% 5.49% 21.31% 10.27%STeFI 0.56% 1.55% 5.90% 5.55%

Equity and listed property

Investec Property Equity Life Fund 11.0 3.40% 12.11% 29.35% 26.11%

Stanlib 7.9 1.68% 11.44% 27.49% 24.02%

Benchmark (SA Listed Property Index) 1.11% 11.08% 26.64% 23.09%

RMB 4 2.0 - - - -

Investec 4 8.0 - - - -

Absa 4 12.6 - - - -

Socially responsible investment

Futuregrowth Infrastructure Bonds 8.9 -1.05% 3.94% 12.50% 11.84%

Benchmark (Albi) -1.55% 4.25% 10.15% 8.74%

Sakhisizwe 2 12.0 0.48% 2.58% 11.66% 10.88%

Benchmark (composite) -0.25% 2.43% 10.31% 11.66%

Money market

IS Banker 7.4 0.60% 1.81% 6.69% 6.58%

Total fund

Total fund 210.1 0.95% 3.47% 15.21% 13.10%

Benchmark (CPI + 4%) 0.15% 0.99% 9.03% 9.38%

Notes: 1 All three-year and five-year returns are annualised. 2 The Sakhisizwe benchmark is a composite (grouped) benchmark made up of:

Index WeightingSwix 20%

CPI + 6% 30%

CPI + 4% 20%

Albi 30%

3 The returns for Caveo Stable are a composite of the Caveo Moderate and Stable portfolios as a switch was made in 2011. 4 Equity Linked Notes are held with RMB, Investec and Absa. A table of implementation dates can be found on page 3 of the report.

10279-GBI TR 2015-05 .indd 6 2015/05/05 2:58 PM

6

Market performance – December 2014

Performance to 31 December 2014 1 month 3 months 1 year 3 years * 5 years *

FTSE/JSE All Share Index -0.19% 1.36% 10.88% 19.48% 15.79%

STeFI 0.56% 1.55% 5.90% 5.55% 5.85%

Albi -1.55% 4.25% 10.15% 8.74% 10.01%

FTSE/JSE SA Listed Property 1.11% 11.08% 26.64% 23.10% 21.37%

MSCI World (Rands) 3.08% 3.54% 16.53% 30.92% 21.29%

Rand/Dollar 4.73% 2.39% 10.45% 12.74% 9.46%

Infl ation (CPI) -0.18% 0.00% 5.31% 5.47% 5.19%* Annualised

ADDITIONAL VOLUNTARY CONTRIBUTIONS (AVCs)You’re encouraged to make additional contributions into the fund over and above your current contributions if you wish to do so. Remember, your employer does not need to match your contributions as they are additional and voluntary on your part.

PLANNING FOR A HAPPY RETIREMENTFor many people retirement planning covers only the fi nancial aspects such as investing and saving for your retirement. But research shows that various non-fi nancial issues like your health, a sense of community, emotional support and a continued sense of purpose are among the top concerns for retirees.

When you plan for your retirement, keep in mind that you need to plan for more than just your fi nancial needs. Having enough money will defi nitely make for a comfortable retirement. But with good health, meaningful activity, good relationships and a network of support, you can cross that fi nal gulf between being comfortable and being truly happy. Meeting these non-fi nancial needs during retirement means you have to plan very deliberately during your working years – just like you would plan for your fi nancial well-being.

6

PLANNING FOR A HAPPY RETIREMENTFor many people retirement planning covers only the fi nancial aspects such as investing and saving for your retirement. But research shows that various non-fi nancial issues like your health, a sense of community, emotional support and a continued sense of purpose are among the top concerns for retirees.

When you plan for your retirement, keep in mind that you need to plan for more than just your fi nancial needs. Having enough money will defi nitely make for a comfortable retirement. But with good health, meaningful activity, good relationships and a network of support, you can cross that fi nal gulf between being comfortable and being truly happy. Meeting these non-fi nancial needs during retirement means you have to plan very deliberately during your working years – just like you would plan for your fi nancial well-being.

Some examples of how you could start planning for a happy retirement:

• Set aside time to fi nd out what kinds of activities or community-based programmes you can become involved in when you are no longer working full time.

• Share your plans or at least your ideas with your family or close social circle. You may be pleasantly surprised by how much support they will off er to help you realise your retirement dreams.

• Invest in relationships. Make friends of your family and family of your friends. Spend quality time with the people in your life as often as you get the chance and if you’re just not getting the chance, maybe it’s time to adjust your work-life balance? Retirement can be an unexpectedly lonely experience and having relationships you can dip into will more than pay its dividends in the currency of happiness.

10279-GBI TR 2015-05 .indd 7 2015/05/05 2:58 PM

Modern retirees live on average up to 27 years after retiring – assuming most retire at age 65. With all that extra time, it may be worthwhile having a retirement plan in place that not only provides the needed funds, but also answers that nagging question, “So, what do I do with myself now?”.

LEGISLATIVE UPDATEThis section of your trustees’ report gives you information on any important legislative changes that can aff ect your retirement savings.

RETIREMENT REFORM DELAYEDMost changes to how retirement funds work will no longer come into eff ect this year on 1 March 2015 as the government had originally planned. Changes to how fund contributions are taxed and how much cash you can take at retirement will only happen in 2016 or later.

Two things will still change from 1 March 2015: tax on disability benefi ts and the defi nition of retirement fund accrual date (the date on which you can claim your benefi t).

TAX TREATMENT OF DISABILITY INCOME PREMIUMS AND BENEFITIf your fund has an employer-owned disability income benefi t, the premiums will be added to your taxable income as a fringe benefi t. This means that from 1 March 2015 you won’t be able to claim a tax deduction on these premiums any more. However, the income from the disability benefi t will no longer be taxed when it is paid to someone receiving a disability income benefi t.

DEFINITION OF RETIREMENT FUND ACCRUAL DATEWhen you retire, you can either buy a pension with your entire benefi t or cash in a portion as a lump sum. If you buy a pension, it will be taxed as normal income according to your marginal tax rate during retirement. Any cash you take will be taxed according to the retirement fund lump sum tax table.

At retirement you have to decide what portion you want to use to buy a pension and how much you want to take as cash. However, if you are a member of a pension fund, you have to use at least two-thirds of your retirement benefi t to buy a pension, unless your retirement fund is R75 000 or less.

At the moment your lump sum benefi t is deemed to accrue (can be claimed) on the earliest of the date on which:

• You make an election • You die

• Your money is transferred • You retire.

Your retirement date is your normal retirement age as set out in your fund’s rules.From 1 March 2015, the date on which the lump sum benefi t will accrue to you will no longer depend on your normal retirement age, but instead will be the date on which you choose to retire. Your retirement benefi t will be the amount, according to the rules of your fund, on the date that you choose to retire.

10279-GBI TR 2015-05 .indd 8 2015/05/05 2:59 PM

8

TAX-FREE SAVINGS ACCOUNTThe government is also changing laws to allow for tax-free savings to encourage individuals to save for retirement, education or other goals. You won’t have to pay income tax, capital gains tax or dividend tax on your returns in this type of account. Certain rules will apply though:

• You’ll be allowed to open multiple tax-free savings accounts.• You can contribute up to R30 000 a year in these accounts.• There will be a lifetime limit of R500 000 for tax-free savings.• You can withdraw your money from these accounts at any time, but it will aff ect your lifetime limit (you can never top up again).• You’ll have to pay tax on any contributions over the yearly limit.

Why reform is important

Alexander Forbes research shows that most people retire with less than one-third of their fi nal salary to live on in retirement. The reality is that although the South African retirement system has many good features, there are a number of issues to address:

• Ensuring that everybody is protected in some way against poverty• Ensuring that every worker contributes enough towards their retirement to keep their standard of living in retirement • Ensuring the retirement system off ers value for money.

The government has announced that it will delay the implementation of certain retirement reform changes. This has far-reaching implications for all fund members.

Trustees and funds have been discussing the implications of the taxation changes in the Taxation Laws Amendment Act 2013 (TLAA 2013). These changes have become known as the T-Day changes, and were supposed to take eff ect on 1 March 2015.

Delaying retirement reform has highlighted that pensions are intensely personal to South Africans. That’s why it’s important that we all understand the changes and why the government wants to implement them – that’s transparency and inclusion.

TAX IMPLICATIONS ON EXITING THE FUNDYour benefi ts on leaving the fund will be taxed as follows:

If you take cash

Withdrawal

Taxable amount Rate of tax

0–R25 000 0% of taxable income

R25 000–R660 000 18% of taxable income above R25 000

R660 001–R990 000 114 300 + 27% of taxable income above R660 000

Amount exceeding R990 000 203 400 + 36% of taxable income above R990 000

Retirement and death

Taxable amount Rate of tax

0–R500 000 0% of taxable income

R500 001–R700 000 18% of taxable income above R500 000

R700 001–R1 050 000 36 000 + 27% of taxable income above R700 000

Amount exceeding R1 050 000 130 500 + 36% of taxable income above R1 050 000

RULE AMENDMENTS

10279-GBI TR 2015-05 .indd 9 2015/05/05 2:59 PM

9

Retirement fund rules must be registered under the Pension Funds Act and approved under the Income Tax Act. Changes made to the rules are called amendments and must be registered and approved by the Financial Services Board (FSB).

No rule amendments were approved and registered during the period under review.

FUND CONTACT DETAILSIf you have any questions, comments or suggestions about the fund, your benefi ts, investments or any other fund-related issues, please contact one of your trustees or your principal offi cer:

Fund nameGauteng Building Industry Pension Scheme and Provident Fund

Registered addressAlexander Forbes115 West StreetSandton 2146

Financial Services Board registration number Provident Fund (12/8/29375)Pension Scheme (12/8/4508)

AdministratorAlexander Forbes Financial Services (Pty) LtdEmail: info@aforbes.co.za.

PENSION FUNDS ADJUDICATOR Registered addressPension Funds Adjudicator4th FloorRiverwalk Offi ce Park Block A, 41 Matroosberg Road Ashlea GardensPretoriaSouth Africa0181  

Tel:  012 346 1738 or 012 748 4000 Fax: 0866 937 472Email: Enquiries@pfa.org.za Website: www.pfa.org.za

If you have lodged a complaint with your board of trustees, principal offi cer or the fund administrator and have not received a satisfactory response, you must report the case to the pension funds adjudicator. The details are stated above and this is done at no cost to you.

If there are any confl icts between the information in this trustees’ report and the offi cial rules of the fund, the rules of the fund will always apply.

If you have lodged a complaint with your board of trustees, principal offi cer or the fund administrator and have not received a satisfactory response, you must report the case to the pension funds adjudicator. The details are stated above and this is done at no cost to you.

If there are any confl icts between the information in this trustees’ report and the

10279-GBI TR 2015-05 .indd 10 2015/05/05 2:59 PM

10279-GBI TR 2015-05 .indd 11 2015/05/05 2:59 PM

1Alexander Forbes Communications. 10279-GBI TR 2015-05

10279-GBI TR 2015-05 .indd 12 2015/05/05 2:59 PM