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To: Members and Sponsoring Employers of the Saturnia Regna Pension Fund From: Benefits Consulting Services Ltd, Secretaries to the Saturnia Regna Pension Fund Subject: Update On The Activities Of The Fund Date: Thursday 18th May 2017 Dear Esteemed Members and Sponsoring Employers,   1. Introduction The objective of this communiqué is to respond to the needs that the Saturnia Regna Pension Fund (SRPF) Members and Sponsoring Employers have expressed to us and who have requested us to clarify certain statements in the press that have been published over the past few weeks and also to give you an update of the Fund’s performance over the past 12 months. Saturnia Regna Pension Fund (the Fund) remains the largest Multi-Employer private sector pension fund in Zambia with assets that you own which were valued at ZMW 1.85 billion as at 31 st December 2016. The Fund has a large responsibility looking after the retirement savings of over 35,000 Members employed by over 140 companies. The Fund has been compliant and continues to be compliant in meeting all its legal and statutory obligations, and also continues to be regulated by the Pensions and Insurance Authority (PIA), and supervised by the Investment Committee (IC), the Audit and Risk Committee (ARC) and the Board of Trustees (BoT) of the Fund. Therefore the process of investing and monitoring the assets of the Fund, while initiated by the service providers, is a collective effort with various governance structures of the Board of Trustees who approve the investments in line with the Fund’s Investment Policy and regulatory guidelines. In addition to the above oversight, there are 3 more committees and boards of directors for both service providers that scrutinise all your investments and activities on a regular basis. We are glad to also announce that PricewaterhouseCoopers (PwC), the external auditors, concluded their statutory annual audit of the Saturnia Fund for the financial year 2016 and we await the Annual General Meeting (AGM) of the Fund for the auditors to formally table their successful audit findings and financial results. 2. Management of the Fund The Fund’s administration and secretarial services are provided by Benefit Consulting Services Limited (Bencon) and the Fund’s assets are managed by African Life Financial Services (Zambia) Limited (Aflife). The asset managers created this fund 25 years ago in 1992, grew its membership through its commitment to integrity, trust, responsibility and innovation to the industry and have managed to grow your savings within an agreed risk profile with oversight from the IC and the Fund’s Board of Trustees that are in the best interest of the Members. We would like to point out that that the last 2 years have been turbulent years for many countries like Zambia whose economies are dependent on mineral exports and who have been hence economically affected, not only in the sub-Sahara region, but also in the Americas and in Asia. It is true that during this period, Aflife and some Members and Sponsoring Employers of the Fund had differences in opinion with some of the Fund’s ex-trustees, which led to the parties seeking legal advice on certain issues that are of importance to the Fund. We realise and regret that some newspapers have chosen to misrepresent these differences in different ways but we believe that these matters are confidential to the ex-trustees of Saturnia and as such do not wish to comment on subjects that may be misrepresented again or be sub-judice. However, we wish to reiterate that all pension fund assets that are owned by the Fund on behalf of its Members remain registered in the Fund and all Fund governance processes follow the regulations governing the industry and Fund’s Trust Deed. In addition, we would like to highlight that 9 out of the 10 Board of Trustee positions are vacant for numerous reasons, and therefore a quorum cannot be formed to hold meetings of the BoT, and we are working on your behalf to urgently convene an Annual General Meeting (AGM) of the Fund, which will give the opportunity to elect the candidates whom you proposed in March 2017 to fill these Trustee positions. As service providers licensed by the PIA, we have a fiduciary duty to protect the Member’s interests by rigorously following the Pension Scheme Regulation Act of 1996 which governs our industry, the Trust Deed of the Saturnia Regna Pension Trust Fund and the directives of the Regulator, the PIA. We assure you that we have fulfilled our obligations and will continue to protect your interest in line with our obligations as fiduciaries. We are also disappointed that you were not able to elect the trustees of your choice at the scheduled AGM of 24th March 2017, even though you had participated very strongly in the Trustee elections process; but we can assure you that we are in the process of enabling the AGM and fresh elections to take place as soon as possible, and will be in a position to announce the modalities for the Trustee elections by Monday 23rd May 2017. 3. 2016 Performance The returns for the year 2016 could at best be described as modest as the Fund endured negative performance from the local equities market which had a return of negative 30% on the back of a very tough operating environment which saw most listed companies not declaring dividends and also reduced profitability. Although the global equities (outside of Zambia where some of the funds are invested) did well, the Fund incurred negative returns due to the appreciation of the local currency. The other asset classes; money market, bonds and the property portfolio all did very well and made up for the negative performance of the equities. Gross return was about 8% while net distribution to members amounted to 4.4%, which was below inflation of 7.5%. 4. 2017 Performance So Far The year 2017 started off on a very good note, supported mainly by a strong recovery in local and international equities. Although interest rates are coming down and will most likely come down further, the Fund is also still enjoying good interest rates from investments from the prior year. The property portfolio also continues to contribute through rental income although there is pressure on vacancy. For the first 3 months 31 March 2017, the Fund’s investment return and income were more than what was achieved for the whole year in 2016. We remain fairly confident that in 2017 the fund will perform well relative to its objectives, particularly given how well the assets are spread across all asset classes as shown below: fund_perform 5. Conclusion As your Administrators and Fund Managers, we have a collective fiduciary duty of care to ensure that members of the Fund get real returns and achieve their retirement objectives at the end of their working life. This we do through our best efforts, which are underpinned by investment in our staff, our operating systems as well as management of the risk environment. All this is overlaid by the governance structure within our own firm as well as those of the Trustees and the regulators. There will be some years where the objectives will not be met, like in 2008/9 as well as last year. We can nevertheless assure members we will continue to invest the assets entrusted to us prudently in pursuit of members’ long term objectives. If you wish to have more information, could you please call us at +260 211 253772, 0211 252265, or email us at newsletter@bencon.co.zm