Glacier International Global Life Plan Technical Guide

GLACIER INTERNATIONAL GLOBAL LIFE PLAN TECHNICAL GUIDE

Offshore investment solutions to suit every investor.

This guide provides the background information and constraints pertaining to the Glacier International Global Life Plan. It should be read in conjunction with the relevant Global Life Plan brochure and information sheets, available on Glacier International’s secure website.

THINK WORLD CLASS INTRODUCTION

ABOUT GLACIER

Glacier by Sanlam brings together leading experts and respected REGULATORY OVERVIEW: BERMUDA financial services companies to meet clients’ investment needs. AS AN INTERNATIONAL INVESTMENT Glacier is a wholly-owned subsidiary of Sanlam Ltd, and a JURISDICTION leading player in the South African investment industry. Our collection of investment solutions has been designed to span a Glacier International has selected Bermuda as international lifetime, and fulfil the needs each life stage may bring – whether jurisdiction for its investment solutions, as it is well-known one is focusing on the creation or the preservation of wealth. for its financial security and political and economic stability. The financial strength of the market, developments in GLACIER INTERNATIONAL innovative risk financing and strong regulation have ensured that Bermuda is recognised as one of the most Glacier International provides South African investors with important centres for global insurance and reinsurance, and direct international investment opportunities. Our products and about 75% of the Fortune 500 companies have a presence solutions have been specifically designed with the South African in Bermuda. investor in mind, and our range of investment choices span a number of foreign currencies. From Bermuda, investments can be made in almost any market in the world (specifically excluding South Africa), THE GLOBAL LIFE PLAN and if exchange control approval was obtained when the investment was made, benefits (withdrawals) can be paid The Global Life Plan consists of a collection of endowment to the client’s bank account anywhere in the world. (Please policies underwritten by Sanlam Life Insurance Limited, through note that benefits can only be paid to the client’s South its branch in Bermuda. An endowment policy is a life policy, as African bank account if they made the investment using the defined in the South African Long-term Insurance Act. Each asset swap capacity of a South African financial institution.) policy is also a linked policy, as defined in the South African Long-term Insurance Act. Glacier International’s products and activities are subject to the supervision of the Bermuda Monetary Authority, the The Global Life Plan offers a number of benefits for clients: South African Financial Sector Conduct Authority and the Prudential Authority. • A diverse range of investment choices, including collective investment funds and direct share portfolios, in a number of foreign currencies. • Estate planning advantages which help avoid the compli- cations of winding up an international estate, as well as some of the costs and potential international inheritance tax liabilities. • Tax efficiency and simplicity, as tax administration (calculation, collection and payment to SARS) is taken care of by Glacier International, simplifying the tax process for investors . • Capital liquidity. Withdrawals are allowed (subject to limitations), and early surrender fees are only charged where applicable. • Protection from creditors after three years. • Consolidated administration and reporting.

GLACIER INTERNATIONAL GLOBAL LIFE PLAN TECHNICAL GUIDE | APRIL 2020 2 GLOBAL LIFE PLAN

KEY FEATURES Tax-efficiency and simplicity Glacier International is responsible for the calculation, collection Ownership* and administration of any tax due: Natural persons, trusts and companies with multiple ownership options. • Capital gains tax (CGT) on all realised gains from switches, share trading and withdrawals. CGT is recovered at 12% for Nomination of beneficiaries individuals and trusts with natural persons as beneficiaries, For ownership*: Nomination for ownership is used to replace an and 22.4% for companies, owner without having to withdraw from the plan. • Income tax on any income (rental and interest) received. It is recovered at 30% for individuals and trusts with natural For proceeds: Benefits are payable to beneficiaries if there is no persons as beneficiaries, and 28% for companies. surviving life insured. • Foreign dividends tax, at a rate of 20% for individuals and trusts with natural persons as beneficiaries if tax is not Cessions recovered at source. The plan holder may cede the entire plan as collateral security. The investor therefore has no personal tax administration to Investment choices take care of. The tax paid may be less than an investor would The Global Life Plan offers a wide range of investment options, pay in their personal capacity depending on their personal tax including collective investments and securities (held through rate. Tax is calculated in USD. third-party service providers). If a client is invested in roll-up funds (i.e. funds that do not Liquidity** distribute interest and dividends), only CGT will be applicable. Withdrawals are permitted, depending on regulatory restric- tions. Regular, scheduled withdrawals are not allowed. After the The above is based on current tax legislation. Please bear in initial five-year term any number of withdrawals can be made. mind that any future changes in the tax legislation may affect A full withdrawal during the first three years may attract a fee, the investment value. depending on certain options selected at inception. Protection from creditors Switches Once the Global Life Plan has been in force for at least three Switches may be made between investment choices. years, plan benefits (other than for a debt secured by the policy) may not be attached, or be subject to execution under a judge- Phasing in ment of court, or form part of the plan holder’s insolvent estate. Three, six and 12-month phasing-in options are available on Upon the death of the plan holder, if the plan holder is survived initial or additional investment amounts. by a spouse, child, stepchild or parent, the benefits of the Global Life Plan cannot be made available for the payment of the plan Recurring investments holder’s debts. The protection continues for a period of five Recurring investments cannot be made. years from the date that the benefits are provided.

GLACIER INTERNATIONAL GLOBAL LIFE PLAN TECHNICAL GUIDE | APRIL 2020 3 MINIMUMS AND MAXIMUMS

Initial investment amount Minimum $25,000 or the currency equivalent in euros, British pounds, Swiss francs and Australian dollars.

Additional investment amount Minimum $5,000/€5,000/£5,000/CHF5,000/AUD5,000

Withdrawal** Minimum $5,000/€5,000/£5,000/CHF5,000/AUD5,000

Surrender** Subject to restricted period and residual contract value.

Residual contract value on withdrawals and restricted surrenders Minimum 10% of the original investment amount must remain in each plan.

Size of switch Minimum $1,000/€1,000/£1,000/CHF1,000/AUD1,000

Ownership (plan holders*) Minimum age next birthday: 18

Number of switches Maximum four free switches a year. Glacier International re- serves the right to charge a fee of $50/€50/£50/CHF50/AUD50 per switch should the number exceed four per annum.

Lives insured Maximum 10 lives, with the youngest life insured to be no older than 90 at next birthday at inception.

Beneficiaries Maximum 10

* Residents or citizens of the United States of America (or any of its territories) or Bermudian residents are not allowed to invest in this product.

** Subject to restriction period rules. The “restricted amount” is the maximum amount that can be either partially or fully encashed which is limited to the contributions received on the contract plus 5% interest compounded annually. The only instance under which a full surrender could be possible within the restricted period would be when the surrender value is less than the original investment amount plus 5% compounded per annum.

GLACIER INTERNATIONAL GLOBAL LIFE PLAN TECHNICAL GUIDE | APRIL 2020 4 FEES AND CHARGES

Fees can be charged by different parties involved in providing Example services related to the investment: • Financial intermediaries may charge initial advice fees, as Investment amount: USD 100,000 well as annual advice fees for services provided; 1.15% (including VAT) • Glacier International charges an annual policy administration Negotiated fee:

fee for the administration of the plan, and if a client Fee paid to the intermediary: USD 1,150 enhances their investment with shares or model portfolio options, additional fees will apply. Allocation to the investment plan: USD 98,850 • The managers of the investment options selected, will charge annual management fees for the management of Option B: the selected investment options. The initial advice fee is paid to the intermediary upfront, by Glacier International. The fee is not recovered from the initial investment amount, but funded by Glacier International. These fees are summarised on the quotation, as per the example below. (These fees are indicative and for illustrative purposes They pay the negotiated fee to the intermediary and add the only.) difference between the maximum fee (3%) and the negotiated fee to the investment amount prior to investment. The maximum fee of 3% is then recovered from the plan in equal instalments Example over a period of 36 months.

Example Fee type Initial Annual

Intermediary (incl. VAT) 1.15% 0.58% Investment amount: USD 100,000 Administration n/a 0.36% Negotiated fee: 1.15% (including VAT) Asset Manager n/a 0.45% Fee paid to the intermediary: USD 1,150

Total 1.15% 1.39% Maximum fee less negotiated fee 3.45% - 1.15% = 2.3% (incl. VAT):

Financial intermediary fees Allocation to the investment plan: USD 102,300 Initial and annual advice fees can be negotiated between the client and the financial intermediary, and are expressed as a An additional finance charge of 0.011% per month of the initial percentage of the investment value. investment amount will be charged and recouped on a monthly basis over the first 36 months if the plan remains in place. If Initial advice fees: the client surrenders in full within the first three years an early surrender fee will apply. An initial advice fee of up to 3% (excluding VAT) can be negotiated and agreed between the client and the financial Annual advice fees: intermediary. An annual advice fee of up to 1% (excluding VAT) can be negotiated and agreed between the client and the financial intermediary. The fee is calculated and deducted monthly from the There are two initial advice fee payment options available: investment plan, in the reporting currency of the plan.

Option A: The initial advice fee is paid to the intermediary upfront. Glacier International recovers it directly from the investment amount prior to investment.

GLACIER INTERNATIONAL GLOBAL LIFE PLAN TECHNICAL GUIDE | APRIL 2020 5 Annual policy administration fees*** For investments in Navigate, a flat administration fee of 0.30% Annual administration fees are deducted on a monthly basis, (including custody fees) will be charged. throughout the duration of the investment. Full surrenders Fees are based on a tiered fee scale according to the combined Full surrenders within the first five years are only possible if the value of a client’s investment plans. The applicable fee will be surrender value is less than the initial investment amount plus determined for each calendar quarter, based on the combined 5% compounded per annum. plan value as at the end of the previous calendar quarter. Full surrenders within the first three years may attract an early A tiered fee schedule levies fees in increasingly lower percentages surrender fee if initial advice fee payment option B was selected: as the plan value increases. If a tier is crossed, the administration fee will be adjusted up or down and the new fee will be applied In year 1: 3.45% for the next calendar quarter. In year 2: 2.38% In year 3: 1.23% Fees will be deducted on plan level proportionally from all daily priced investment funds. It will be compulsory to invest a No surrender fees are applicable after the first three years. minimum of 3% of the plan value in daily priced funds to facilitate fee deduction. This percentage will be checked monthly and if *** Please refer to the relevant quotation for a summary of all fees or the amount in daily priced funds is insufficient, a switch will be consult our regional offices for further details. executed to top up the value of those funds.

GLACIER INTERNATIONAL GLOBAL LIFE PLAN TECHNICAL GUIDE | APRIL 2020 6 This document is intended for use by financial intermediaries. The information in this document is provided for information purposes only and should not be construed as the rendering of advice to clients. Although we have taken reasonable steps to ensure the accuracy of the information, neither Sanlam nor any of its subsidiaries accept any liability whatsoever for any direct, indirect or consequential loss arising from the use of, or reliance in any manner on the information provided in this document.

Navigate portfolios are managed by Glacier Financial Solutions (Pty) Ltd., a Licenced Discretionary Financial Services Provider, FSP 770, trading as Glacier Invest

April 2020