Seshego Benefit Consulting

LEBONE ENGINEERING

RETIREMENT FUND CHOICES

26 February 2010

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WHAT IS BEING MADE AVAILABLE An explanation letter A Member Investment Choice (MIC) booklet Supporting MIC portfolio fact sheets A member choice form A presentation on the choices Illustration software that you can get from

Solomon Bokake A website page with the communication on

www.saopenfund.co.za/Lebone.htm

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CHOICE ISSUES Why choice? Trustees’ role in choice funds Communication available Elect single MIC portfolio. Annual choice.

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FINANCIAL PLANNING Retirement, Risk & Estate Planning Retirement - Budget Set a realistic target Risk - Who are your dependents What are your assets Plugging the gaps Estate Planning – Get advice, if needed

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RETIREMENT PLANNING Defer retirement Additional contributions Invest differently Modern Portfolio Theory Growth assets are included for long term

capital growth

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FTSE/JSE long-term return

61%

0%

-10%

29%

-8%

16%

25%

47%

41%

19%

-23%

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Annualised returns over 40-years April 1969 – March 2009 (Gross)

10.0% 10.0% 10.0% 10.0%

3.5%6.3%

0.9%1.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Equity Bonds Cash Property

Inflation Real Returns

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INVESTMENT CHOICES Inflation plus 7% Inflation plus 5% Inflation plus 3% Capital guarantee portfolio How are you going to invest after

retirement? Default is Inflation plus 5%

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PORTFOLIO CONSTRUCTION

0%

26.92%

53.98%

70.39%

0%

39.62%

20.12%

6.65%

0%

3.41%

13.59% 11.60%

100%

29.40%

11.15% 10.39%

0%10%

20%30%

40%50%

60%70%

80%90%

100%

Capital Guaranteed CPI + 3% CPI + 5% CPI + 7%

Equities Bonds

Property Cash & Money Market instruments

Alternative Investments Commodity

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DEATH COVER

3X annual pensionable salary Disability cover (about 75% of annual

salary) Insurance costs change

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INVESTMENT NET OF COSTS

By way of example:

Contribution                                          13,00%   e.g.  R100,00 Less Group Life                                    1,02%    e.g.  R   7,85 Less PHI (disability)                             0,74%    e.g.  R   5,70 Less admin costs (estimate)                  0,65%    e.g.  R   5,00 NETT towards investment              15,41%           R 81,45

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IN SUMMARY

Do a budget to set a retirement target, then put in place a retirement plan

Establish the life cover you need Get professional help if you need estate

planning Stick to your plan

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