Professional Provident Society (PPS)

PPS Living Annuity

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Following retirement, you are confronted with the challenge of how best to preserve your nest egg. Your ability to sustain your desired lifestyle depends on the growth of your retirement capital as well as the level of income you choose to draw after retirement.

The PPS Personal Pension provides income after you have retired from a retirement annuity, pension, provident or preservation fund. An appropriate investment portfolio can be created from the PPS Preferred Funds range of unit trusts. Between 2,5% and 17,5% of the net investment value may be withdrawn annually as income. You may select to withdraw this income monthly, quarterly, halfyearly or annually.

The PPS Living Annuity is designed to allow you the flexibility to change your level of post-retirement income and/or switch between investment options as circumstances change without incurring any penalties.

It is important to note that the income drawn from your PPS Living Annuity is not guaranteed and will be affected by the investment performance of the funds in which you have selected to invest. An overly aggressive drawdown will negatively affect capital in a downward market. All fees relating to the underlying unit trust funds are disclosed to ensure the transparency of all costs relating to your investment.

KEY BENEFITS AND FEATURES

Investment options

The range of PPS Preferred Funds offers a selection of multimanaged PPS unit trusts that provide clearly defined underlying investment choices. We also give you the choice of a selection of top-performing single manager unit trusts to ensure that you have a varied and well-defined range of alternatives.

Prudential Investment Guidelines Compliance

The PPS Living Annuity is required to comply with the Prudential Investment Guidelines of Regulation 28 of the Pension Funds Act and with Exchange Control legislation. As such, the maximum permitted equity exposure is 75%, of which no more than 15% may be in international investments, and no more than 25% in property.

Switching

You may change your investment options as often as you choose without incurring a transaction fee. Certain underlying fund managers do, however, charge an initial upfront fee for investment in their products, which would be applied upon your switch into those funds.

Annuity

You may choose to receive your income monthly in arrears, quarterly in advance, half-yearly in advance, or annually in advance. You may change the level of income that you draw on the anniversary date of your investment. Current legislation limits your annual annuity to a minimum of 2,5% and a maximum of 17,5% of the net investment value.

Your PPS Living Annuity should provide you with income for life.
It is your responsibility to ensure that the level of income that you have selected is at a level that would be sustainable for life.

Tax

Tax will be deducted from the payments of the annuity in accordance with prevailing income tax legislation. An annual tax certificate will be issued to you.

Transfer

You may transfer an existing living annuity to the PPS Living Annuity, as well as transfer your PPS Living Annuity to another registered living annuity.

Cessions

You may not cede your PPS Living Annuity, nor use it as security for debt.

Loans

You may not borrow from your PPS Living Annuity.

Death benefits

If the initial investment was as a result of retirement from a retirement annuity, up to one third of the investment value may be commuted as a lump sum by your dependants or nominated beneficiaries.
The balance must be used to provide an income for your dependants or beneficiaries over a period of at least five years. If, however, the initial investment was as a result of retiring from a pension or provident fund, your dependants may commute the full benefit to a lump sum within six months of your death.

Cooling-off period

A 30 day cooling off period applies from the date that you receive your PPS Living Annuity summary. Should you choose to terminate the investment within this period, your original investment will be returned to you, but may be reduced as a result of market losses. This option will not be available to you if you have made any switches to your investment selection or if any benefit has been paid within the cooling-off period.

Minimum investment

• Lump sum: R100 000
• Recurring: Not applicable
• Ad hoc: Not applicable

COSTS AND CHARGES

Initial fees

The PPS Living Annuity does not charge an initial fee on investment amounts, and investment in any PPS multi-managed unit trust will not incur initial fees either. Should you, however, choose to invest with one of the underlying fund managers, an initial fee of 0,29% (including VAT) may be charged.

Ongoing fees

An ongoing administration fee of 0,8% (including VAT) is charged annually on the PPS Living Annuity. The fee is reduced by applying considerable 'partnership savings' that we have negotiated with the underlying fund managers. The annual administration fees that you pay are reduced by the full extent of these savings as follows:

Scenario 1

PPS Living Annuity investing in a PPS multi-managed unit trust:

• Annual administration fee 0,8%
• Partnership saving 0,8%
• Net annual administration fee 0%

Scenario 2

PPS Living Annuity investing in a third-party single-manager unit trust:

• Annual administration fee 0,8%
• Partnership saving 0,46%
• Net annual administration fee 0,34%

• Please note that partnership savings offered by third-party fund managers differ
• All fees quoted are inclusive of VAT

The annual management fees for the underlying unit trusts are
fully disclosed on the investment option schedule.

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