NEW MEMBER GUIDE BPSA Provident Fund

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Congratulations on becoming a member of the BPSA Provident Fund!

This short Member Guide has been created to give you a quick overview of what it means to be a member of the BPSA Provident Fund, what your benefits are as a fund member and how to get the most out of your membership. Please take a few minutes to read through this guide. We guarantee it will be an excellent investment of your time.

For more detailed information about the various benefits and procedures relating to your BPSA

Provident Fund membership, be sure to also read the following supplementary guides:

1. BPSA Provident Fund Investment Guide

2. BPSA Provident Fund Death and Disability Benefits Guide

3. BPSA Provident Fund Retirement Guide

4. BPSA Provident Fund Withdrawal Guide

Your can download all of these guides from the BPSA Provident Fund website at

https://www.bpsaprovidentfund.co.za. The website also includes more information about the

fund and its benefits, as well as the latest news and information updates – so be sure to check

back online regularly.

The BPSA Provident Fund exists to help you save for your retirement and also gives you access to a range of valuable benefits like death and disability cover and pension backed home loans.

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Who looks after your fund?

In addition to being responsible for effectively managing the fund from day to day, the board of trustees have to:

• Assess and select appropriate

investments and investment managers

• Communicate with fund members

an keep them up to date about all

matters regarding the fund

• Make decisions about who should

receive benefits of members who have

passed-away in service

• Help resolve disputes lodged by members

about various aspects of their fund

• Know and understand the rules of the

fund and be aware of any changes to

the law governing the fund

You can find a list of the names of the Trustees

online at:

https://bpsaprovidentfund.co.za/fund-information/trustees-and-fund-management/

The BPSA Provident Fund is managed by a Board of Trustees who control and oversee the business of the Fund in line with all the laws relating to retirement funds as well as the Fund rules.

The Trustees have also appointed a Principal Officer who is responsible for the day-to-day running of the Fund.

The Board of Trustees is made up of sixteen Trustees. Eight of these are elected by the Fund members and the other eight are elected by BPSA as the employer.

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Understanding your retirement fund

As a member of the BPSA Provident Fund, you have the unique opportunity to partner with

your employer (BPSA) to save towards the retirement you want, and deserve. BPSA wants you

to enjoy a financially secure retirement, which is why they have made it compulsory for all

permanent employees, accept those who are members of a bargaining unit, to be a member

of the BPSA Provident Fund. By making regular monthly contributions to your fund, which invests

those contributions for you, you will be able to steadily grow your retirement savings so that you

can maximise your chances of eventually enjoying a happy and carefree retirement.

Of course, BPSA Provident Fund also knows that nothing in life is certain, so your fund includes a

carefully structured death benefit that helps to ensure that your loved ones will be looked after

if you should pass away unexpectedly. More about that later.

You and BPSAWorking together for a secure retirement

1. How it works

2. Contributions (yours and BPSA’s)

3. Your Fund Credit

4. Your investment choices

5. Keeping track of your investment

6. What happens when you retire?

7. What happens if you leave BPSA?

8. What happens if you pass away while you are working for BPSA?

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How much is contributed on your behalf?

BPSA contributes a minimum of 13% of your

pensionable earnings towards retirement

savings. You have the option of allocating

additional funds from the flexible component

of your package. Your total contribution

towards risk and retirement funding can

vary from between 13% to 29% of your

pensionable earnings.

The percentage chosen, at the point of

structuring your remuneration package,

will vary according to your personal

circumstances.

You may exercise this choice within 3 months of your appointment to BPSA. If you do not exercise this choice you total

contribution will automatically be defaulted

to 13% of your pensionable earnings.

Every month, BPSA deducts a percentage of your pensionable salary (70% of your Total Cost of employment) as a contribution to the BPSA Provident Fund.

All the costs that you need to pay for your Fund and your death and disability benefits are

then deducted from this total contribution amount. Everything that is left is then paid into your

Member Share Account, which is also called your Fund Credit. You can get more information

on the current costs on the Fund website

https://bpsaprovidentfund.co.za/member-benefits/contributions/

Your Fund contributions

You can elect to increase your contribution rate at any time by simply contacting your

HR department. You can however only decrease your contribution rate on 01 April each year.

If you wish to reduce your contribution

rate at any other time you must submit a

substantiated motivation to the Principal

Officer in writing. The Principal Officer will

forward your request to the Board of Trustees

for their consideration. Every request will be

considered on an individual basis and on

the merits of the specific case, If the request

is approved by the Board it will be applied

prospectively.

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Did you know that you can consolidate your retirement savings?Your retirement savings in other approved funds may be transferred to your BPSA Provident Fund Credit, subject to what is allowed in terms of the Income Tax Act. You can find out more on how to do this on the fund website www.bpsaaprovidentfund.co.za

What effect will increasing your contributions have?Since every person is different, and the contributions you make differ from those a colleague makes, it’s difficult to answer that question accurately. However, even a 1% increase in the amount you contribute to your Fund every month can grow into a massive extra amount that you have available to invest when you retire. The example below shows this:

Peter is a 30-year-old BPSA employee whose pensionable earnings are R10 000 per month. If he keeps his fund contributions at 13% (starting at R1300 per month) until he retires at the age of 60, he will have R4.8 million saved up to retire with.

If, however, Peter decides right away to increase his retirement contribution by just 2% to 15% (starting at R1500 per month), he will retire at 60 with almost R5.6 million saved in his Fund. That’s almost R1 million more, and it didn’t cost Peter very much more every month to achieve it

*Example assumes returns of inflation plus 4% per year and an inflation linked increase in

contributions annually.

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A word about tax: Your contributions towards your retirement savings are tax deductible. That means that your contributions to BPSA Provident Fund come off your salary before tax is calculated, and this makes your tax bill smaller. You are able to make tax-deductible retirement fund contributions of up to 27.5% of the greater of your remuneration and taxable income. Tax deductions will only apply to the first R350 000 that you save each year.

The total amount saved in your Fund

account is known as your Fund Credit. It is

made up of the following:

1. The total monthly contributions made by

you and BPSA so far (less any costs); PLUS

2. Any additional (voluntary) contributions

you have made; PLUS

3. Any amount that was transferred into

the BPSA Provident Fund from another

fund (for example the fund of a previous

employer) when you became a member;

PLUS

4. Any investment returns (growth) your

savings have accumulated over time.

Over time, your fund credit could become

one of your biggest financial assets. The

money that is invested in the Fund goes

towards providing you with an income when

you retire. Making sure you look after your

fund credit and invest it wisely could mean

the difference between a comfortable

retirement doing all the things that you

are looking forward to doing or one of just

making ends meet, or worse.

Your Fund Credit

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Put simply

• You put money into BPSA Provident Fund each month.

• This money grows with investment returns.

• At retirement, this pool of money can either be taken in cash or can be used to buy a pension.

• A pension will give you a regular stream of income that needs to last for the rest of your life.

This is the member Account Balance that you have saved up to at retirement.

Regular income payments from your annuity (pension). These need to last for the rest of your life.

20’s 30’s 40’s 50’s 60’s 60’sretire-ment

60’s 60’s 70’s 70’s 70’s 70’s 80’s

You can take all or part of your Member Account Balance as a cash lump sum*

Employer contributions Member contributions Investment return

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Your Fund Credit is invested to help it grow over time and enable you to achieve your retirement goals. The assets of the Fund are managed by independent investment experts at Sygnia Asset Management. The Pension Funds Act regulates the way in which these assets may be invested to make sure that your Fund Credit is invested appropriately. Your Fund Credit cannot be used for any other purpose than providing retirement benefits for you as a member of the Fund.

The BPSA Provident Fund offers a number of

investment choices, designed to match the

growth and risk management preferences

of all members. You can choose to have

your fund credit invested in:

• The BP LifeStage Model funding for cash

or with-profit annuity (Fund default option)

• The BP LifeStage Model funding for a living

annuity

• A tailor-made investment from selected

portfolios

Each of these options is outlined briefly

below. For detailed information on your

investment options, be sure to read the

BPSA PROVIDENT FUND INVESTMENT GUIDE.

1. The BP LifeStage Model funding for cash or with-profit annuity - This investment model

is designed to allow your investments

to automatically adapt to your risk and

return needs as you progress through your

career towards retirement. It is structured

to maximise the chances that you will

secure an income in retirement that is a

reasonable percentage of what you were

earning while you were working (assuming

you contribute enough and keep up

with your contributions throughout your

career). It is also designed to minimise the

negative impacts of short-term ups and

downs in market performance when you

get close to retirement. It is best for you if

you plan on buying a with-profit annuity or

taking your fund credit in cash when you

retire.

2. The BP LifeStage Model funding for a living annuity - This model is designed for people

who plan on using their fund credit to buy

a living annuity when they retire. From

age 53, investors in this fund will have their

investment transitioned between various

portfolios every quarter, to carefully

balance the returns they need with the

risks they can tolerate as they approach

retirement. Around six years before

retirement age (60), the investment will be

phased into a conservative portfolio for

protection of the capital you have built

Your investment choices

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up. However, this option is more exposed

to equities than option 1 above in the

final years before retirement, so there is

a slightly better chance of higher returns,

but also a slightly higher risk.

3. A tailor-made investment portfolio - You

can choose to tailor make your own

investment strategy, but this option is

only recommended if you have a good

understanding of investments and

markets, and you use the professional

advice of a qualified and accredited

financial planner. You can choose from

the following portfolios:

• One or more of the investment

portfolios from the BP LifeStage Model

(i.e. Signature 70 (long-term portfolio),

Signature 40 (Stable portfolio) or Money

Market (income protection portfolio);

and

• The Islamic Balanced Fund, which is the

Shari’ah compliant portfolio.

Before you make any decisions about where

to invest your fund credit, be sure to read the detailed Investment Guide and, if you

plan on choosing any option other than the

default (option 1 above) you are strongly

advised to speak to a financial adviser.

Remember: The rate at which your fund

credit grows is linked to the performance

of your investments. If your investments do

well, your fund credit will increase. But, if

your investments perform badly, the value

of your fund credit could decrease. That’s

why it is very important that you think very

carefully about where you want to invest

your retirement savings. If you aren’t sure

about what option is best for you, speak to a

qualified financial adviser.

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Keeping track of your retirement savings

Your normal retirement age is 60. On the last day of the month, following your 60th birthday you

are allowed to access your total Fund Credit. You can do the following things with this Fund

Credit:

• Withdraw all of it as cash - A certain portion of the CASH lump sum will be tax exempt and

the balance will be taxable.

• Use all of it to buy a pension (annuity) - from an insurer of your choice.

• A combination of the two options above

You should get sound financial advice before you make a decision about what to do with

your Fund Credit when you retire. Remember, this is the money that you have saved for your

retirement, you need to make good choices that will enable you to live a long, healthy and

happy life in retirement.

What happens when you retire?

• View the current value of your Fund Credit;

• View your annual member benefit statement, projection statement and death needs analysis;

• Update your beneficiary nomination form;

• View your quarterly investment statement; and

• Make use of the useful tools and calculators.

Click here to register now and unlock your passport to knowledge…

AF Online provides you with 24/7 access to all your fund information. It is a powerful tool that can help you manage your financial future. By registering for AF Online you will be able to:

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A note about early or late retirement:You are allowed to retire from BPSA any time after you reach the age of 55. In certain circumstances, you may also be allowed to retire after you the age 60, provided BPSA agrees to this as your employer. Remember, the size of your Fund Credit is directly linked to how long you have been contributing. So taking early retirement could mean that your Fund Credit is lower than you need it to be.

Note: You can find out more about the above options and the tax implications in the RETIREMENT GUIDE

If you leave BPSA before retirement (for example if you resign, or get dismissed or retrenched),

you will receive the full amount of your Fund Credit at the time you leave the organization. That

includes any money you transferred into the Fund when you started working at BPSA, all your

contributions, all BPSA’s contributions and any growth that the investments have achieved. You

have a number of options available as to what you can do with this Fund withdrawal benefit.

You can:

• Keep the money invested in the BPSA Provident Fund (called a paid-up member or a

deferred pension)

• Transfer the money to another approved fund (like a fund offered by your next employer);

• Transfer the money to a preservation fund or a retirement annuity;

• Take the money as a cash pay-out, less any applicable tax; or

• Take some of the money as cash and transfer the rest to another fund.

Note: You can find out more about these options and the tax implications in the WITHDRAWAL GUIDE

Leaving BPSA before you retire

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If you die while working for BPSA, your death

benefit is worked out as follows:

1. An amount calculated as a multiple of

your pensionable salary based on how old

you are on your next birthday (See table

below. The amount equals the multiple

shown times your annual pensionable

earnings);

PLUS

2. The full fund credit you have built up in

the BPSA Provident Fund at the date of your

death.

It is VERY IMPORTANT that you keep the

information about your dependents and

beneficiaries up to date with the Fund. You

need to complete a beneficiary nomination

form when you join BP and should review

this information at least once a year and

as and when your personal circumstances

change.

NOTE: The Group Life Assurance Cover provided by the fund is separate to the Group Life Cover offered by BPSA as your employer. These benefits will be paid separately if you pass away, so you need to make sure that your beneficiary form is up to date for both benefits.

Death after retirement

The death benefit that will be paid to your

dependents if you die after you have retired

is different to the death benefit while you

are still working for BPSA. The payment will

depend on the type of annuity you buy

from an insurer when you retire. There is no

additional amount paid out as a multiple of

your salary, since you no longer work for BPSA.

Death while employed by BPSAThe Fund helps to provide for your dependents and beneficiaries if you pass away. If you die while still employed by BPSA, your dependents (spouse, children or other people who depend on you financially) will be paid an amount from your Fund death benefit. This is made up of your total Fund Credit at the time of your death PLUS a group life cover amount provided by the Fund. If you don’t have dependents, then your benefit will be paid to your beneficiaries, who you have nominated on your BPSA Beneficiary Nomination Form.

Understanding your death benefit

Agenext birthday

New insured multiple

18 - 258.7

26 - 308.2

31 - 357

36 - 406.2

41 - 455.6

46 - 504.8

51 - 554.1

56 - 603.5

61 - 653

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If you become disabled while you are working for BPSA, you will receive a disability benefit from

the company. This is not connected to the BPSA Provident Fund in any way. However, your

contributions to the BPSA Provident Fund will continue to be made by the insurer while you are

getting disability benefits. The amount of those contributions are worked out as a percentage

of your pensionable earnings at the date of your disability, up to a maximum Fund contribution

of R30 000 per month. The percentage is reviewed annually to ensure that it keeps pace with

inflation. You may also be allowed to retire from the Fund early due to ill health.

Understanding your disability benefit

Conversion of your life and disability cover to individual policies

If you are leaving BPSA, you can apply to convert your Group Life Assurance Benefit from the Fund and your Disability Income Benefit from BPSA to individual life and disability policies that you will then hold with Capital Alliance and Old Mutual respectively. You must apply to do this within 31 days of leaving BPSA. You will be given quotes for the individual cover that you can discuss you’re your financial adviser.

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Understanding the pension-backed housing loan

As a member of the BPSA Provident Fund,

you could get help with accessing finance

from a bank to buy or improve a house. This

benefit allows you to use the amount you

have built up in your Fund Credit as a form

of security for the loan from the bank, which

may then lend you the money to

• put down as a deposit on a home or

property;

• help with building your home; or

• make an improvement to, or repair your

home.

Note: The Fund does not provide you with the loan. It only offers a guarantee on the loan up to the value of a 45% of your total Fund Credit after tax. You then have to repay the amount that you have borrowed, plus interest, back to the bank over a period of time. This is in addition to the normal monthly contributions to your Fund, so you need to make sure that you can afford this extra monthly loan repayment.

Because retirement fund money is a type of

long-term savings banks can only use it as

security for a loan related to housing.

You can find out more about the pension-

backed housing loan benefit on the fund

website www.bpsaprovidentfund.co.za

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If there’s anything you need to know about your Fund, please speak to your HR Manager, who may need to contact the Principal Officer of the Fund or one of the Trustees for more assistance.

Please also refer to the BPSA Provident Fund website at www.bpsaprovidentfund.co.za

Keep in touch

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Your BPSA provident fund checklist

Read this New Member Guide in full

Notify your previous fund if you would like to transfer your retirement savings into the BPSA Provident Fund

Complete the new member application form

Complete your beneficiary nomination

Make sure that you provide the Fund with the correct personal information

Submit your documentation to HR together with a certified copy of your ID

Register for AF Online, a powerful tool that can help you manage your retirement savings

Relax and enjoy a successful journey to the retirement you deserve

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