SANLAM UMBRELLA FUND
Important update on the 2022 Annual Revision of
Administration Fees, Group Insurance Premiums and Contingency Reserve Account Levies
The Sanlam Umbrella Fund* usually revises administration fees, group insurance premium rates and contingency reserve account levies on 1 April of each year. This communication summarises the plans for the 2022 annual revision.
*Note that Sanlam Unity Umbrella Fund fees, risk premiums and levies are usually revised on 1 March each year.
Clients to be revised effective 1 July 2022:
Due to the Covid-19 Pandemic, some clients will have fees and risk premiums revised three months later than usual for 2022. However, this is only for the closed group of clients that received risk premium interim increases effective 1 October 2021. The reasons for deferring the review for these clients include:
- It makes practical sense to divide the 18 months from 1 October 2021 to the 1 April 2023 annual revision date into two revision periods of nine months each.
- The insurers have already implemented significant risk premium rate interim increases for these clients to consider the additional risks associated with Covid-19. As a result, the insurers are prepared to grant a three-month delay in the next premium rate review date.
- This delay allows the insurers to gauge the actual impact of the predicted Covid-19 Fourth Wave. Should the impact not be as severe as predicted by some experts, this may hopefully mitigate further risk premium rate increases.
All other clients will be revised effective 1 April 2022 as usual:
The only exception to this will be new Sanlam Umbrella Fund clients that commenced participation on 1 May 2021 or later, and who on 1 April 2022, will still be within the 12-month guarantee period applicable to new clients. These clients’ fees and risk premiums will be subject to initial review at the 1 April 2023 annual revision date.
Contingency Reserve Account Levies revised on 1 April 2022 for all clients as usual
The administration fees do not include the operational and governance costs and disbursements incurred by the Fund, e.g., Financial Sector Conduct Authority (FSCA) levies and fees, fidelity insurance premiums, actuarial services, audit services, independent trustee expenses, member communication, etc. These fees are recovered through a monthly Contingency Reserve Account (CRA) levy, which the trustees determine in terms of a budgeting process. The CRA levy is currently R3.00 (VAT inclusive) per member per month for all members and is recovered from member shares.
From 1 April 2022, the basic FSCA levy and Pension Fund Adjudicator (PFA) levy on all retirement funds will no longer be recovered via the CRA but directly from member shares. The Board recently resolved on this change because the quantum of this levy is outside its control. Hence, it believes it will be more transparent to recover this cost separately and appropriately indicated. FSCA levies in respect of special rules registrations and Section 14 transfers will, however, continue to be recovered from the CRA as the Board has some influence on these applications.
It has further been decided that CRA levies will thereafter be revised effective 1 January of each year starting from 1 January 2023. This aligns the Fund’s annual expense budgeting process with both the Fund’s financial year-end as well as Sanlam’s financial year-end.
Consulting Fees are not subject to automatic revision:
We remind consultants that in the Sanlam Umbrella Fund, we operate a monthly pay-for-service consultancy fee model. As part of this model, it is recognised that participating employers may negotiate a tailored consultancy service with their advisors.
Consulting fees are therefore not subject to an automatic review as part of the annual revision process. Consulting fees can be reviewed at any time by negotiation and agreement between the Contracted Benefit Consultant/Contracted Financial Adviser and the participating employer. A change in consulting fees is implemented via the Fund’s formal amendment process.
Should you wish to review any consulting fee for 2022 and implement such a change as part of the annual revision process, all signed documentation to this effect must reach us not later than 26 January 2022.
You may start the process by completing an amendment request document and forwarding it to us without delay. Click here for the amendment request document.
1 April 2023 Annual Revision for all clients:
The different revision dates for 2022 are extraordinary due to the Covid-19 Pandemic, and the extraordinary risk premium interim increases effected 1 October 2021.
Further interim risk premium increases are not, at this stage, anticipated during 2022. Instead, all clients will have fees and risk premiums next revised effective 1 April 2023 (i.e., as usual), and at each subsequent 1 April.
Watch out for further client-specific communication in early 2022 pertaining to 1 April 2022 changes:
Further client-specific communication setting out administration fee, group risk insurance premium rates and CRA levy changes effective 1 April 2022 will follow during January 2022, and in April 2022 for the July 2022 revision.
This communication will be sent in two separate batches – firstly to all Contracted Benefit Consultants regarding their own clients, and thereafter to all participating employers.
Queries:
If you have any queries about the Sanlam Umbrella Fund’s 2022 annual revisions process and timelines, please get in touch with your Sanlam Client Relations Manager.