Golden Growth

With-Profit Annuity

Helping you to be

financially secure during

retirement is at the heart

of what we do.

Did you know that people are living a

lot longer nowadays? This means

retirement can easily be 20 years or

longer. Secure a guaranteed retirement

income for life with Momentum’s

Golden growth With-Profit Annuity.

Investment strategy • A Bonus Generating Portfolio. The returns generated by the

assets in this portfolio are taken into account when deciding on

the annual bonus which determines your pension increase

each year. This portfolio, which consists of a range of different

asset classes, is called the Bonus Generating Portfolio.

• An Income Matching Portfolio. Assets in this lower risk

portfolio are carefully selected to make sure that the

current guaranteed level of the pension can be met in the

future.

Assets are moved between the Bonus Generating Portfolio and

the Income Matching Portfolio to manage risk within the Golden

Growth With-Profit Annuity, resulting in very competitive annual

management costs.

The strategic asset allocation of the Bonus Generating Portfolio is:

The Income Matching Portfolio consists of assets such as bonds,

money market investments and bank instruments.

The assets are managed in terms of Momentum Investments’

outcome-based investing philosophy. Outcome-based investing

means constructing a portfolio that is capable of maximising the

probability of achieving the investment goals.

2

21%

11%

7%

20%

41%

0%

10%

20%

30%

40%

Globalassets

LocalProperty

LocalCash

LocalBonds

LocalEquities

The Golden Growth With-Profit Annuity

When you purchase an annuity, you need to

carefully consider how to invest your retirement

savings so that you and your loved ones have a

sufficient income when you no longer have a

salary.

When you buy the Golden Growth With-Profit

Annuity with your retirement savings, you will have

the security of a guaranteed income for life. In

addition, annuity increases are declared every year

and once an increase is granted it can never be

taken away.

The Golden Growth With-Profit Annuity is a good

choice if you want:

• A guaranteed monthly income for life, which

will never decrease.

• Annual pension increases that cannot be

taken away once granted.

• Annual pension increases based on the

investment returns of the underlying assets.

• To allow for the level of your spouse’s and

children’s pensions.

• To choose a guaranteed period over which a

minimum number of pension payments will be

made.

Important decision: your post-retirement

interest rate When you choose your initial pension, you also need to choose

your post-retirement interest rate (PRI). The PRI determines the

size of your initial pension and the level of future pension

increases. • The higher the PRI, the higher your initial pension but the

lower the future expected increases.

• The lower the PRI, the lower your initial pension but the

higher the future expected increases.

The Golden Growth With-Profit Annuity offers a range of PRIs from

1% to 6% in increments of 0.5%. Each PRI represents the minimum

return that the underlying investments must earn for the starting

or current pension to be paid. Returns above the PRI are used to

grant increases, which is why lower PRIs are associated with higher

pension increases.

PRI Targeted inflation protection (% of CPI)

3.5% 110%

4.0% 100%

4.5% 90%

5.0% 80%

Annual pension increases Annual increases to your pension are not guaranteed but

awarded based on the investment returns of the underlying

portfolio. The aim is to generate inflation-targeting increases

through active portfolio management and dynamic asset

allocation between the Bonus Generating Portfolio and the

Income Matching Portfolio.

Smoothing for stable long-term annuity increases You wouldn’t want your pension increases to be significantly

different from year-to-year because of market volatility. A

process of ‘smoothing’ is applied so that your annuity increases

remain relatively stable over the long term.

Impact of smoothing

No smoothing

Val

ue

With smoothing

Time

Once investment returns are smoothed, an annual bonus is

declared. To determine the value of this bonus, the following

is considered: • the return earned on the combined investment portfolio;

• mortality profits or losses; • other important factors that need to be thought of

when managing investment risks.

The annual bonus is important as, along with your PRI, it will

determine the increase you will receive.

Increases over time The graphs below show the pension increases of the Golden

Growth With-Profit Annuity with a PRI of 4% compared to inflation

(measured by the Consumer Price Index - CPI).

What about your loved ones? Depending on the guarantee period you have selected, your

nominated beneficiaries like your spouse or children will receive

your full monthly pension for the rest of the guarantee period.

For example, if you choose a guarantee period of five years and

you pass away two years after buying the annuity, your

nominated beneficiaries will receive your full monthly pension for

the rest of the five year period that is for three years. After that,

their income will reduce to the level of the spouse’s and

children’s annuity you selected

3

0%

2%

4%

6%

8%

10%

12%

14%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

4% PRI increases CPI

0%

2%

4%

6%

8%

10%

12%

3 year average 5 year average 10 year average

4% PRI increases CPI

Frequently asked questions

How does spouse's annuity work?

You have the option to include an income for your spouse after you pass away. You choose the level of your spouse’s annuity, expressed as a percentage of your pension at the time of your death. This percentage is called a spouse’s reversion percentage. For example, if you choose a spouse’s reversion of 75% and received a pension of N$ 1 000 per month at the time of your death, your spouse will receive an annuity of N$ 750 per month after you pass away.

What is a guaranteed period?

A guaranteed period makes sure that a minimum number of pension payments are made. For example, if you choose a guaranteed period of 5 years, then the pension will be paid for the period whether you are alive or have passed away. After the end of the 5 years the pension will continue if you are alive or will stop if you have passed away, or will reduce to the level of the spouse’s and children’s annuity you selected.

What is CPI?

CPI stands for consumer price index. CPI is an average percentage of the increase of a basket of consumer goods and services over a period of time, usually per year.

What is an asset class?

Investment portfolios invest in various asset classes such as equities or shares, bonds, property and money invested in the bank.

What does investment return mean?

The amount by which a portfolio’s investments appreciate or depreciate in market value over a particular period, usually expressed as a certain percentage a year, also referred to as investment performance. If the value of an investment increases as a result of capital growth, dividend income, rental income or interest received, this results in a positive investment return.

The way in which we manage the Golden Growth With-Profit Annuity is detailed in the Principles and Practices of Financial

Management (PPFM) document available on our website.

Email: baugustus@momentum.com.na Website: http://www.momentum.com.na

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