CONSOLIDATED RETIREMENT FUND (CRF) FOR LOCAL …

1 CRF Client Procedure File 2017 /18 Page 2 of 85 Copyright Sash Consulting (Pty) Ltd. CONSOLIDATED RETIREMENT FUND (CRF) FOR LOCAL GOVERNMENT CLIENT PROCEDURE FILE 2017 /18 Contents Page PLEASE NOTE: 7 INTRODUCTION AND WELCOME 8 INDEMNITY 8 BENEFIT STRUCTURE OVERVIEW 9 CRF SECTION 2007 9 DEFINITION OF A NEW EMPLOYEE. 9 CRF BENEFIT STRUCTURE OVERVIEW FOR NEW MEMBERS 10 RISK BENEFIT CATEGORIES 12 MEMBER COMMUNICATION 15 MEMBER BENEFIT STATEMENT 15 NEWSLETTERS 15 WEBSITE 15 MEMBER EDUCATION WORKSHOPS/HELPDESK 16 FUND CONTACT INFORMATION 17 CALL CENTRE 17 MANAGEMENT OF THE FUND 18 PRINCIPAL OFFICER 18 DEFINED BENEFIT VS. DEFINED CONTRIBUTION FUNDS 18 Risk Comparison 18 Cross-Subsidies 19 Age Cross-Subsidy 19 Marital Status Subsidy 19 Stayers vs.

2 Leavers Subsidy 20 Implications of Cross-Subsidies 20 RETIREMENT Planning 21 Treatment of Death and Disability Benefits 21 CRF Client Procedure File 2017 /18 Page 3 of 85 Copyright Sash Consulting (Pty) Ltd. PENSION VS. PROVIDENT FUNDS 21 INSURED BENEFIT CATEGORIES 22 FINANCIAL INFORMATION: INVESTMENT RETURNS 23 GENERAL 23 PROCEDURE FOR A NEW EMPLOYEE 24 HOW TO COMPLETE THE NEW MEMBER APPLICATION FORM 24 HOW TO COMPLETE THE DEPENDANTS AND BENEFICIARIES NOMINATION FORM 25 NEW MEMBER WELCOME LETTER 26 PROCEDURE FOR PAYMENT OF CONTRIBUTIONS 26 METHOD OF PAYMENT 26 MEMBER INFORMATION REQUIREMENTS 26 MEMBERS WHO ARE PENDING DISABILITY CLAIMS, ABSENT, OR ON UNPAID LEAVE 27 SALARY REDUCTIONS 27 SECTION 13A OF THE PENSION FUNDS ACT 27 PROCEDURE FOR COUNCILLORS 30 JOINING THE FUND 30 CONTRIBUTION RATES 30 EXITING THE FUND 30 PROCEDURES ON EXIT 31 OVERVIEW OF DEDUCTIONS FROM BENEFITS 33 RESIGNATION/DISMISSAL 34 Introduction 34 What form needs to be completed?

3 34 What supporting documents must be attached? 34 Deductions from benefits 34 Payment options on Resignation/Dismissal/Retrenchment 35 RETIREMENT 36 Introduction 36 What form needs to be completed? 36 What supporting documents must be attached? 36 Deductions from benefits 36 Options on RETIREMENT 36 DEATH 37 Introduction 37 What forms need to be completed? 37 To avoid delays in the claim process, please supply us with the following supporting documents: 37 Deductions from benefits 38 Disposal of death benefits 38 Payment options 38 Trust/beneficiary funds 38 What are the benefits of setting up a beneficiary fund or trust? 39 Section 37C of the Pension Funds Act 39 DISABILITY 42 Introduction 42 What forms need to be completed? 42 What supporting documents must be attached? 42 Understanding the Fund s insured disability product 42 CRF Client Procedure File 2017 /18 Page 4 of 85 Copyright Sash Consulting (Pty) Ltd.

4 Implications 43 What is the difference between permanent and temporary disablement? 43 Definition of disability 43 Deadline for notifying the Fund of a claim 44 A claim should be submitted when: 45 The claim waiting period 45 Consequences of a delay in submitting the claim forms and documentation 45 Appealing the decision of a declined claim 47 Deductions from benefits 47 Frequently asked questions 47 FUNERAL BENEFIT CLAIM 47 Introduction 47 What form needs to be completed? 48 What supporting documents must be attached in the case of death of a: 48 Your checklist to save you time 49 How to claim for the repatriation benefit 49 DREAD DISEASE BENEFIT 49 Introduction 49 What forms need to be completed? 49 What supporting documents must be attached? 50 Claim Procedure 50 REORGANISATION / REDUNDANCY / RETRENCHMENT 52 Introduction 52 What form needs to be completed? 53 What supporting documents must be attached? 53 Deductions from benefits 53 PROCEDURE ON TRANSFER 54 Introduction 54 Required forms and supporting documents for transfers 55 Housing Loans on Transfer 56 Section 14 of the Pension Funds Act: implications on transfer to another fund 56 OTHER FUND BENEFITS 58 FNB SMART HOUSING PLAN 58 Background 58 Interest Rates 58 Applying for an FNB Smart Housing Plan loan 58 Qualifying criteria 58 Smart Housing Plan Loan - Application procedure 59 Steps to follow: 59 Members should understand that: 59 What supporting documents must be attached?

5 60 For All Cases: 60 Purchasing: 60 Building or Renovating: 61 Defaulting on the repayment of a housing loan 61 Pros and Cons of Surety Agreement vs. Direct Loan 62 FAMILY ASSISTANCE BENEFIT 63 VALUE ADDED BENEFITS (VABS) 64 EXTENDED FUNERAL COVER FOR YOUR FAMILY 64 How to apply for the Extended Funeral Cover 64 CRF Client Procedure File 2017 /18 Page 5 of 85 Copyright Sash Consulting (Pty) Ltd. When will the cover start? 64 How to claim on the Extended Funeral Cover? 65 Important criteria to remember 65 FNB HOUSING LOAN FOR INCOMES OF R3 500 R25 000 PER MONTH 66 Who qualifies for this benefit? 66 How can this benefit help first-time homebuyers? 66 How does a member apply for the loan? 66 Interest Rate 66 Loan repayments 66 INVESTMENT PORTFOLIOS AVAILABLE TO MEMBERS 67 SWITCHING PORTFOLIOS 68 SWITCHING DEFINITIONS AND ALLOWANCES 69 Investment Risk for the different Portfolios 69 Asset Classes 69 Suitability 70 Frequency of Switches 70 Switch Percentage Options 71 FUND INFORMATION 72 FUND GOVERNANCE 72 Associated parties 72 Administrators 72 Investment Managers 73 Principal Officer 73 Actuary 73 Consultants 74 Auditors 74 Financial Services Board (FSB) 74 Trustees 74 Pension Funds Adjudicator 75 The Adjudicator can be contacted as follows.

6 75 Risk-benefit providers 75 South African Revenue Services (SARS) 75 Unions 75 SALGBC (South African LOCAL Government Bargaining Council) 76 Ombudsman for Long Term Insurance 76 FUND COMMUNICATION WITH MEMBERS 76 Member benefit statements 76 Annual report 77 Pensioner Information 77 Communication to pensioners 77 Pension increases 77 Procedure when a pensioner dies 77 Proof of age and education certificates for children s pensions 77 LEGISLATION 79 THE PENSION FUNDS ACT NO. 24 OF 1956 79 Regulations to the Act 79 PENSION FUNDS (PF) CIRCULARS 79 THE INCOME TAX ACT 1962 79 CRF Client Procedure File 2017 /18 Page 6 of 85 Copyright Sash Consulting (Pty) Ltd. THE DIVORCE ACT 80 Date of accrual: 80 Divorce orders granted before 13 September 2007: 80 Divorce orders granted on or after 13 September 2007: 80 The value of the pension interest 81 A previous divorce 81 Applicable marriages 81 OTHER RELEVANT ACTS 81 THE RULES OF THE FUND 82 DISPUTE RESOLUTION 82 TAXATION 82 The tax-deductibility of contributions 82 The taxation of benefits 83 RETIREMENT 83 DEATH 83 DISABILITY 83 WITHDRAWAL/RESIGNATION/DISMISSAL 83 OTHER TAX ISSUES 84 Registration of taxpayers 85 Retrenchment/redundancy over age 55 85 Date of accrual for tax purposes: 85 CRF Client Procedure File 2017 /18 Page 7 of 85 Copyright Sash Consulting (Pty) Ltd.

7 Please note: 1. Reasonable care has been exercised in compiling this document. The CONSOLIDATED RETIREMENT Fund for LOCAL Government does not accept liability for any loss, damage or expense that may be incurred as a direct result or consequence of reliance upon the information in this document. If there is any conflict between the information in this document and the Rules of the Funds, then the Rules of the Funds will prevail. 2. The contents are based on the Funds benefit structures as at 1 July 2017 . Changes after this date will be communicated via the monthly HR newsletters and updated in the next volume of the Client File. 3. The contents are based on the Pension Funds Act, the Income Tax Act, and other relevant legislation. This legislation may change from time to time. 4. All the claim forms mentioned in the Client File are available on the Fund s website on CRF Client Procedure File 2017 /18 Page 8 of 85 Copyright Sash Consulting (Pty) Ltd.

8 INTRODUCTION AND WELCOME Welcome to the CONSOLIDATED RETIREMENT Fund for LOCAL Government (CRF). The Fund appreciates the amount of co-operation and hard work that is required from our Human Resources counterparts at the various LOCAL authority offices. As a result, we have developed the Client File, exclusively for your benefit. The primary purpose of this document is to consistently keep you up to date with the CRF benefits, protocols, and procedures. In so doing we are hoping to further improve our working relationship with you and at the same time improve the service offered to our members, especially when claiming a benefit. We are available to provide you with training on any aspect of this document. Training can be arranged at your convenience to take place at your offices. Should you leave the Human Resources department, please arrange that the individual replacing you is booked for similar training. A technical document such as this takes many months to revise so in the interests of maintenance we have kept the material in English.

9 We will keep you updated with any changes in the industry via your monthly HR newsletter. Our call centre operators have been intensively trained on the file. Should you have any queries, please feel free to contact us on 0861 CRFUND (273863) or via email at The CRF has a long history of providing excellent employee benefits to employees of LOCAL Authorities nationally. As of June 2017 , the assets of the Fund were in excess of billion, and the Fund has a membership base of more than 44 000 members. It is our pleasure to welcome you to our administration processes, and we look forward to being of meaningful assistance to you. Indemnity The CRF and SASH Consulting do not accept liability for any loss, damage or expense that may be incurred as a direct result or consequence of reliance upon the information in this document. If there is any conflict between the information in this document and the Rules of the CONSOLIDATED RETIREMENT Fund, then the Rules of the Fund will prevail.

10 If in doubt about any of the information, please contact the Fund s Member Centre on 0861 CRFUND (273863) or refer to the Rules of the Fund, which are available on the Fund s website Helping you manage your future! CRF Client Procedure File 2017 /18 Page 9 of 85 Copyright Sash Consulting (Pty) Ltd. BENEFIT STRUCTURE OVERVIEW CRF SECTION 2007 The CRF Rules were amended on 1 August 2006 for the City of Cape Town ex-contract members and on 1 January 2007 for all other new employees . Definition of a new employee. An employee, who either at the time of joining the Fund was employed on a contract with the City of Cape Town, or who, has subsequently been newly employed by the City of Cape Town from 1 August 2006 and where the City of Cape Town has applied to the Fund for the employee to join this new membership category. This definition is expanded to include all employees employed by any LOCAL Authority and who elect to join the Fund with effect from 1 January 2007.