1. Panel Discussion on Practical, Issues arising out of Surplus Apportionment Schemes 15 th August 2006 Views of a Former member representative: Chris Bosenberg

2. What is good about the Act? Legislated minimum benefits Better protection of the rights of pensioners Revolutionising of the actuarial assumptions to a realistic basis and including the scrutiny of the contingency reserves The negotiation of the future surplus distribution, the employer contribution and actuarial basis, funding levels The FSB’s practical application of the Act

3. What I don’t like The first charge payment of top up benefits to ordinary withdrawals. Largely the rich and sophisticated that benefit The transfer of the unclaimed amount to the Guardians fund (“taxation” of good data) The retrospective legislation regarding “improper use” The relegation of the PNA and transfer of investment reserve to an also ran Legitimate reserves may not be allowed (“hiding surplus”) The costs of the exercise Deciding on “intention” as opposed to ”what the Law’ says No whistle blowing mechanism to report bad trustees The delays in the process Challenges will delay matters further

4. Challenges associated with the role of FMR Collating data –Can it be accurately determined –Accuracy of results Communication –Difficulties in getting to the unsophisticated –Cost Managing of R 80 billion expectations and perceptions –The nil payment –The discrimination of the calculation based on age of the minimum benefit in a DB fund –The relegation of the security of the Fund behind the former member payouts –Former members must be included as an allocation in the residual regardless of what the members received –Possible reduction of future benefits or increase in employer’s contribution rate The vagueness and in some respects poor drafting of the legislation The threat of moneys been paid to the Guardian or similar fund when FM have only received a fraction of their value and the fund is less financially sound The relegation of transfer of the investment reserve on transfers to be included at the charity of the trustees The law versus moral fairness Interpretation of the Act Trustees who do not understand the Act Reasonable versus morality

5. Former member shall represent the interests of former members (i) identifying former members; (ii) communicating proposals to former members and to the funds to which former members transferred; (iii) conveying proposals from former members, and the funds to which they transferred, to the board; and (iv) collating any objections to the scheme from former members and the funds to which they transferred; (b) be required to report, in writing to the board, on— (i) the adequacy of the steps taken by the board to include former members in terms of subsection (4); and (ii) where it was necessary for the board to apply its discretion with regard to the inclusion of former members and the apportionment of actuarial surplus to such former members, whether or not the exercise of such discretion was reasonable taking into account the demands of equity within the bounds of practicality and the circumstances of the particular fund:

6. Difficulties in distributing of residual surplus Wide range of reasonable answers Vagueness of the ACT –General Note: Methods of apportionment deemed to be equitable published under Board Notice No. 37 in Government Gazette 24809 of 25 April, 2003 Relegation of transfer of investment reserve and pensioner surplus Self interest The Law versus what is morally correct Dominant trustee who don’t understand the Act The advice I have received is to agree if within the range of reasonableness taking into account the demands of equity within the bounds of practicality and the circumstances of the particular fund but ensure that complaints are submitted and report to Board goes to FSB.