Sanlam Limited · JSE:SLM
Sanlam — Employers in Distress webinar (2020)
24 slides from Sanlam's conference presentation, 2020
Slide 1: Our world is being tested
Slide 2: Agenda
AGENDA Context Sanlam Umbrella Fund Sanlam Retirement Fund Administration Sanlam Group Risk
Slide 3: Context: Section 13A of the Pension Funds Act
CONTEXT Section 13A of the Pensions Funds Act Payment of any contributions deducted from employees’ remuneration Any contribution for which the employer is liable According to the Fund Rules Payment must be made within 7 days of month end Non-compliance is a criminal offence Certain directors can be
Slide 4: Context: FSCA Communication of 2020
CONTEXT FSCA Communication 11 of 2020 Acknowledge financial impact of COVID-19 on employers and employees No relaxation of S13A Rules need to allow for temporary suspension or postponement Employers in financial distress & unable to pay retirement fund contributions must formally apply for a tempora
Slide 5: Context: Options
CONTEXT Options Temporary absence from work (with or without pay) Break in service Postponement of contributions payments Reduction in pensionable service Funds to inform members of employer’s request to reduce or suspend contributions and any rule amendments to this effect within 30 days of the rec
Slide 6: Umbrella Fund
SANLAM UMBRELLA FUND
Slide 7: Umbrella Fund
SANLAM UMBRELLA FUND Communication issued 30/03/2020
Slide 8: Umbrella Fund: Distress scenarios 1 and 2
SANLAM UMBRELLA FUND Distress scenario 1: Reduction in remuneration, shortened hours Admin requirements Future contributions Admin requires member’s signature / proof of communication Reduced “percentage based” Reduced “percentage based” Normal admin procedures. payment (as long as risk Payment. (FS
Slide 9: Umbrella Fund: Temporary suspension
SANLAM UMBRELLA FUND Temporary suspension (with maintenance of insured benefits) Admin requires member’s signature / proof of communication Admin requirements Future contributions ‘Apply for tem . Only risk premium and admin Proof of communication to porary suspension | and consulting fees payable.
Slide 10: Umbrella Fund: Distress scenarios 3 and 4
SANLAM UMBRELLA FUND Distress scenario 3: Downsizing with the retrenchment of some staff Admin requirements Future contributions Admin requires member’s signature / proof of communication Payment of retrenchment Contributions in respect of Normal benefit payment benefits. remaining staff. procedures
Slide 11: Umbrella Fund: Client support and communication
SANLAM UMBRELLA FUND Client Relations Managers Engage urgently Member communication templates SMS’s to members Web series Individual Member Support
Slide 12: Retirement Fund Administration
SANLAM RETIREMENT FUND ADMINISTRATION
Slide 13: Retirement Fund Administration: Rules and communication
SANLAM RETIREMENT FUND ADMINISTRATION Communication issued 02/04/2020 Funds need to study their respective rules Understand available options Including how ‘pensionable salary’ is defined If a gap exists, then rules need to be amended Submit without delay to the FSCA
Slide 14: Retirement Fund Administration: Member information and amendments
SANLAM RETIREMENT FUND ADMINISTRATION Members must be informed (proof must be provided) No retrospective amendments Consulting, Administration fees & Risk premiums still to be paid Amendment must indicate a fixed period for the reduction or suspension No full employee contribution deductions while t
Slide 15: Temporary Absence or Break in Service
SANLAM RETIREMENT FUND ADMINISTRATION Temporary Absence or Break in Service Employees are not working with unpaid, partially paid or paid leave Status must be indicated on contribution schedules Consulting, Administration fee and Risk premiums still payable Specific mechanisms re risk to be explored
Slide 16: Temporary suspension of contributions for a fixed period
SANLAM RETIREMENT FUND ADMINISTRATION Temporary suspension of contributions for a fixed period Formal documented agreement with employer preferred Clients may have to consult labor lawyers Funds must properly evaluate the financial distress faced by employers Consulting, Administration fee and Risk
Slide 17: Reduction of Pensionable or Risk Salaries
SANLAM RETIREMENT FUND ADMINISTRATION Reduction of Pensionable or Risk Salaries Any reductions must be noted on the contribution schedule Clients to check whether members’ Risk Salaries do not change as a result of any changes to their Pensionable Salaries (unless intended) Risk benefit coverage may
Slide 18: Reduction in Contribution Rates
SANLAM RETIREMENT FUND ADMINISTRATION Reduction in Contribution Rates Large volumes of such amendments will impact delivery timelines Quicker to implement alternate mechanisms
Slide 19: Sanlam Group Risk
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Slide 20: Group Risk: Maintain full risk benefits coverage
SANLAM GROUP RISK Maintain full risk benefits coverage whilst reducing retirement fund contributions through various mechanisms Rules of the Fund need to allow for this mechanism Relates to Approved Cover Unapproved Cover ideally maintained throughout
Slide 21: Reduce Risk Salaries for a limited period
SANLAM GROUP RISK Reduce Risk Salaries for a limited period Risk benefit coverage and Risk premiums reduced accordingly Risk benefit coverage based on most recent Risk Salary and Premium received If Risk Salaries are reduced to Zero, then no risk benefit coverage is applicable Must be carefully cons
Slide 22: Terminate Coverage & Reinstate when Situation Normalises
SANLAM GROUP RISK Terminate Coverage & Reinstate when Situation Normalises No risk premiums payable No risk benefits coverage provided Reinstatement introduces friction (quotes, pre-ex conditions, contracts, etc.) Strongly recommend caution if considering such a route
Slide 23: Group Risk: Communication and liability
SANLAM GROUP RISK Any changes to risk benefits coverage or premiums must be communicated to affected members according to PPR’s Reduction or termination of cover likely to be misunderstood and result in negative reactions Any Fund/Employer considering reductions in risk benefits coverage may be expo
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