We remind all our clients that the Sanlam Umbrella Fund Trustees have approved a contingency reserve account levy of R2.00 per member per month (including VAT) applicable as from 1 March 2013. This levy covers a variety of costs that are incurred in managing the Sanlam Umbrella Fund including FSB levies and fees, fidelity insurance premiums, actuarial, audit, independent trustees, member communication and other fees and disbursements. These contingency reserve account levies are debited from each member’s individual account as part of the monthly receipting process, and no changes are required on employer’s payroll systems. An important aim of the umbrella fund concept is to deliver cost savings to our members via the creation of economies of scale benefits. Growth in our membership base will result in improved economies of scale, which in turn translates to an ever improving value proposition to our members. This is particularly evident in the history as regards the quantum of contingency reserve account levies since the launch of the Sanlam Umbrella Fund:
- The levy was R4.50 per member per month for the whole of 2008 and the first two months of 2009.
- The Trustees reduced the sustainable monthly contingency reserve account levy to R2.25 per member per month from 1 March 2009 (and simultaneously temporarily suspended the levy for the rest of 2009 as a consequence of the massive growth in membership during 2008).
- Because of the continued prudent management of expenditure as well as interest earned, it was announced as part of the 2010 revision process that the suspension of levies would continue until the end of 2010.
- The Trustees approved an expenses budget for the 2011/2012 revision year with the good news the temporary suspension of the levies continues for the first two months of 2011.
- From 1 March 2011, contingency reserve account levies were reintroduced at a much lower level than previously communicated being R1.50 per member per month (including VAT).
- The 2012/2013 revision year saw no increase in the contingency reserve account levies to members.
- As part of the expenses budget for the 2013/2014 revision year, the Trustees approved a small increase in the contingency reserve account levies and a levy of R2.00 per member per month (including VAT) is applicable from 1 March 2013.
The continued sustainable level of contingency reserve account levy is a consequence of a combination of factors:
- The continued prudent management of expenditure within a carefully controlled budgeting framework;
- Interest earned on the Central Contingency Reserve Account balance;
- Interest earned on operating expenses and risk premiums (to the extent not paid to providers) is allocated to the Central Contingency Reserve Account. Note that interest earned on net contributions towards retirement is not allocated to the Central Contingency Reserve Account, but is instead periodically allocated to members).
