MURRAY & ROBERTS RETIREMENT FUND ( the Fund )

Douglas Roberts Centre 22 Skeen Boulevard Bedfordview PO Box 1682 Bedfordview 2008 South Africa Tel: +27 11 456 6200 Fax: +27 11 455 1819 Fax: +27 11 450 1540 E-mail:[email protected] Web: www.murrob.com

11 JULY 2013

Dear Pensioner

MURRAY & ROBERTS RETIREMENT FUND (“the Fund”)

TRANSFER OF PENSIONER ASSETS AND LIABILITIES TO OLD MUTUAL

With reference to the letter dated 11 March 2013, the recent roadshows and the Trustee Report we wish to confirm that the Fund has purchased an “Inflation Linked Annuity Policy” from Old Mutual with effect from 1 May 2013. This policy provides for annual pension increases equal to the increase in the Consumer Price Index (“CPI”)

The above decision to purchase the policy was taken following a thorough tender process that evaluated the offerings of all the major life insurance companies in South Africa. The purchase of the “Inflation Linked Annuity Policy” (reinsurance) means that the assets relating to pensioners have been transferred to Old Mutual who will take over the administration of the pensioner section of the Fund and make monthly pension payments to pensioners with effect from 1 November 2013.

The transfer of the assets and the purchase of the reinsurance policy with Old Mutual is the first step in a process known as “outsourcing”. The proposed ultimate intention is to transfer the full pensioner liability and Solvency Reserve to Old Mutual through a Section 14 transfer process. This will mean that all obligations in respect of pensioners will be transferred from the Murray & Roberts Retirement Fund to Old Mutual.

It is therefore very important that you read the remainder of this document so that you understand the impact that this change will have on you going forward.

Murray & Roberts Retirement Fund Registration No. 12/8/16350/2 Trustees : IG Appleton DL Coetzer E Joubert RC Lerumo LJ Lindsay DL Orton RAG Skudder CL Van Wyk (Chairman) Principal Officer : G Moerdijk 1 Transfer of pensioner assets to Old Mutual

The table below shows how the transfer of the pensioner assets to Old Mutual will impact pensioners going forward.

Before After Murray & Roberts Retirement Fund Old Mutual Inflation Linked Annuity Policy Administration Administration of the Fund is performed by ABSA Administration will be taken over by Old Mutual Consultants & Actuaries (Pty) Ltd. with effect from 1 November 2013. The Fund and ABSA deal with all pensioner The Fund and ABSA will deal with all pensioner queries queries until 1 November. Old Mutual will deal with queries after 1 November. Pension increase policy The Fund targets an annual pension increase of The annual pension increase will be 100% of the 75% of CPI, subject to affordability. The Fund increase in CPI. These increases will be granted has historically been able to grant increases that on 1 March every year using the year-on-year are in line with 100% of CPI. The increase has change in CPI as at December of the prior year. been less than CPI in some years, with a catch- In the event of a decline in CPI, the pension up given in subsequent years. increases in the subsequent year, will be based on the lower CPI, at the end of December and will never go below 0% (i.e. will never be negative).

Your personal information

The Fund recently undertook a data verification exercise for all pensioner members. This information is contained in the covering letter or this letter has been e-mailed separately to you if you provided us with an e-mail address.

It is very important that you contact us immediately should you disagree with any of your personal details. The information will be transferred across to Old Mutual for loading on their administration system and will be used for all future benefits provided.

Outsourcing to Old Mutual

The Trustees also propose to “outsource” the pensioner liability to Old Mutual. This will result in each pensioner receiving an individual annuity policy contract that will be directly between the pensioner and Old Mutual. Thereafter and following the distribution of the Solvency Reserve (see below), the outsourcing process will be completed and “the Fund” will have no further involvement with pensioners.

The table below shows the impact that this change will have on you. Before After Murray & Roberts Retirement Fund Old Mutual outsourcing Involvement from Murray & Roberts Pensioners would contact The Fund or ABSA if The Fund will no longer have any involvement they needed assistance with any retirement fund with pensioners for pension fund benefits and all related matters. pensioner related fund queries will need to be directed to the Old Mutual Pencare call centre.

2 Distribution of Solvency Reserve The Fund holds a Solvency Reserve to ensure The pensioner reserves that were held in the that the Fund can pay pensions even if the Fund will be distributed to pensioners through an Fund’s investment, expense or mortality increase in monthly pensions. Current estimates experience is worse than expected. are that all pension payments will be increased by 7%. Any additional assets over and above the 7% enhancement will be paid as a cash payment to pensioners following the completion of outsourcing and subsequent Fund Annual Financial Statements. This increase will be pro-rated for pensioners who retired in the Fund less than one year ago. Benefits The Rules of the Fund governed the benefits Benefits that were payable in terms of the Fund payable to members. Rules have been written into a contract with Old Mutual and you will therefore continue to receive all benefits for which you are currently eligible. Benefits will only be based on your individual data as reflected in this document. Transfer to an alternative insurer Pensioners had the option on an annual basis to Before the outsourcing is finalised, pensioners transfer their pension out of the Fund to an are being given a once-off option to apply for a alternative insurer subject to having been a transfer to an alternative insurer. Pensioners who pensioner in the Fund for at least three years choose to exit the Fund will still receive their full and subject to approval by the Trustees. share of the reserves. This option is discussed in more detail on the next page.

Transfer of assets to an alternative insurer

Before the outsourcing takes place, the Rules of the Murray & Roberts Retirement Fund allow the Trustees to offer the option to pensioners to transfer his/her pension to an alternative registered insurer. Please note that all applications will be subject to review and approval by the Trustees.

No commission or other intermediary fees have been paid on the transfer of your benefits to Old Mutual. The Fund is confident that it has been able to secure the most favourable terms available in the market. However, pensioners may have personal reasons for considering alternatives.

The Actuarial Reserve Value shown in your personal information can be used to request a quote from your financial advisor. The value has been based on your personal data shown and will therefore change if you notify us of any changes to this information. Please note that the final Actuarial Reserve Value, that will be transferred, will include both positive and negative returns, depending on bond yield movements on the Old Mutual assets up to date of transfer less any pensions that have been paid to you. Your share of the reserves will also be included in the amount transferred.

Please note that there will be a change to the current process that is in place should you be receiving a medical scheme subsidy from Murray & Roberts and choose to transfer your assets to an alternative insurer. Currently Murray & Roberts pays your medical scheme subsidy to

3 ABSA on a monthly basis. Your portion of the contributions is then deducted from your monthly pension and the total amount is paid to your medical scheme. If you then choose to move to an alternate insurer the subsidy portion (minus any “Gap” cover costs, if applicable ),will be paid directly into your bank account and you will be responsible for the payment of the full premium to your medical scheme.

If you transfer to Old Mutual there will be no changes in respect of medical scheme or group life deductions. Should you wish to transfer to an alternate insurer you will need to sign a direct debit order in respect of group life premiums (if applicable).

If you are considering outsourcing to an Insurer of your own choice, it is recommended that you discuss your options with a trusted financial advisor or colleague to fully understand all the possible advantages and risks of opting to select your own Insurer.

Terms applicable for any applications requesting to transfer to an alternative insurer

The following criteria must be met in order for an application to be considered by the Fund:

 All pensions shall be compulsory, non-commutable and non-assignable.  The qualifying spouse’s signature and consent (if applicable) will also be required if the pensioner applies to transfer to an alternative insurer.  Applications for a life annuity must include a pension that increases at 100% of CPI annually. With-profit annuities do not provide a guaranteed increase and will therefore not be considered by the Trustees.  Should you pass away, the annuity must allow for pension benefits to be paid to your qualifying spouse (if any) at the same level as the spouse’s benefit that is available in the Fund.  Applications for a living annuity will only be considered if your Actuarial Reserve Value is more than R1.5 million and you can prove to the Trustees that you have investible assets of R4 million or more. Your Actuarial Reserve Value will be counted towards your investible assets.

The following information will need to be included in the submission to the Trustees:

 A motivation regarding why the transfer has been requested.  Full details of the product that you wish to purchase.  Full details of the fees that will be charged by the product provider and by your financial advisor. These fees will also need to be included on the Financial Services Board Section 14 forms should your application be approved by the Trustees.  Proof of investable assets  Qualifying spouse’s signature and consent ( if applicable)

The Trustees will consider each case presented. However, it is important to note that in terms of the Rules of the Fund, the Trustees have the right to refuse or approve a request to individually outsource to an Insurer of the pensioner’s own choice.

4 Timeframes for submission

The following timeframes will apply to the submission process to have your benefit transferred to another insurer.

Date Action Early July 2013 Distribution of this letter to pensioners From 1 July 2013 Applications can be sent to the Fund for review 30 September 2013 Deadline for submission of applications to the Fund 1 July 2013 – 15 October 2013 Review of applications submitted to the Fund

Please note that the Actuarial Reserve Value is only expected to transfer early in 2014.

Applications to transfer your pension to an alternative insurer can be sent to Betsie Lourens by faxing to 011 455 1819 / 011 450 1540 or by posting to P O Box 1682, Bedfordview, 2008 or emailing to [email protected]

Should you wish to object to the outsourcing (Section 14 transfer to Old Mutual), please provide these objections in writing to the Fund by 30 September 2013.

Please refer to the attached Frequently Asked Questions document for further information. Any other queries or concerns can also be raised in writing and emailed to myself at [email protected]. The Board will respond accordingly.

Regards

A CRAZE SECRETARY

GROUP BENEFITS/NOTICES/M&RRF MEMBERS PENSIONER OUTSOURCING

5 Way forward – Presentation Dates and Venues

The Fund will be conducting presentations at the following venues in order to address any concerns that you may have regarding this process. These will take place at the dates and times noted below:-

DATE TIMES DESTINATION VENUE ADDRESS CONTACT DETAIL 01/08/2013 09H30 Centurion Centurion Lake Hotel 1001 Lenchen Avenue North, Centurion (012)643 3600 02/08/2013 09H30 Nelspruit Nelspruit Hotel & Conference Centre C/O Paul Kruger and Anderson Street , Nelspruit (013)755 3333 05/08/2013 09H30 Durban Greyville Race Course 150 Avondale Road, Greyville (031)314 1659 06/08/2013 09H30 East London Fusion House B & B and Conference Venue 36 Darlington Road, Berea, East London (043)721 1362 07/08/2013 09H30 Port Elizabeth Humewood Golf Club Marine Drive, Summerstrand, Port Elizabeth (041)583 2137 08/08/2013 09H30 George George Lodge International 86 Davidson Road, George ( 044)874 6549 13/08/2013 10H00 Bloemfontein Protea Hotel Bloemfontein Central Bloem Plaza, East Burger Street, Bloemfontein (051)403 8000 14/08/2013 09H30 Durbanville Durbanville Golf Club Sports 'Way, Durbanville (021)976 8120/1 15/08/2013 09H30 Cape Town Kenilworth Race Course Rosmead Drive, Kenilworth, Cape Town (021)797 6037 15/08/2013 14H00 Somerset - West Erinvale Estate Hotel & Spa Lourensford Road, Somerset-West (021)847 1160 19/08/2013 09H30 Johannesburg Birchwood Hotel & OR Tambo Conference Centre View Point Road, Bartlett, Boksburg (011)897 000 19/08/2013 14H00 Pretoria Pretoria North Lodge & Conference Centre 93 Ben Viljoen Str, Pretoria North (012)546 1954 21/08/2013 09H30 Roodeport Roodepoort Country Club Hole-in-One Road, Ruimsig (011)958 1905 23/08/2013 09H30 Potchefstroom Kumkani Country Lodge Parys Avenue, Potchefstroom (018)290 7387 26/08/2013 09H30 Springs Pollack Park Golf Club Tonk Meter Drive, Pollak Park, Springs (011)362 6757 28/08/2013 09H30 Vereeniging Maccau Vlei on Vaal Lodge & Conference Centre Old Sasolburg road, Viljoensdrift, Free State (016)420 2000 30/08/2013 09H30 Welkom Oppenheimer Park Golf Club 3 Oppenheimer Drive, Welkom 072 2797845 02/09/2013 09H30 Howick/KZN Howick Golf Club Vodaworld Boulevard, Howick (033)330 3422 03/09/2013 09H30 Port Shepstone Umthunzi Boutique Hotel & Conference 60 Commercial Road, Umtentweni (039)695 0852

PLEASE NOTE

R.S.V.P to Betsie (011)456 6243 or Elsie (011)456 6242 and confirm at which venue you will be attending.