Explanatory notes

Pension funds

1.

Fair value, determined according to the Financial Reporting Standards applicable to the entity, e.g., South African Statements of Generally Accepted Accounting Practice or IFRS, should be used to report all portfolio asset holdings as at the end of the calendar quarter. The fair value of foreign assets should be converted to South African rands, using the exchange rate prevailing at the end of the calendar quarter.


2.


Institutions are required to report on the allocation of portfolio assets only. The asset allocation must exclude: fixed assets (including items such as furniture and computers and the fixed assets of any domestic asset holding intermediary); arrear contributions; contributions received in advance; and pre-paid expenses.


3.


Assets held through collective investment schemes, insurance policies, other investment products, and asset-holding intermediaries should be disaggregated according to the relevant categories in A through E, and the disaggregated portions of such investments should be reflected within those categories.


Assets held through foreign-registered collective investment schemes should be disaggregated according to the relevant categories in A through E, and the disaggregated portions of such investments should be reflected within those categories. Where disaggregation is not feasible, such schemes should be classified according to their dominant asset class.

Derivative products should be included in the underlying asset class to which they relate.

The following principles should apply to scrip lending: Where scrip is lent and an asset is ceded in its place and is registered in the name of the lender, then the lent scrip should be deducted from the corresponding asset class and the ceded asset should be aggregated into its corresponding asset class. Where scrip is lent and there is no such cession, the value of the transaction should be reflected under ‘Other portfolio assets’ as the lender has only a claim against the counterparty.


4.


Rand denominated foreign assets refers to foreign assets that are held indirectly through a domestic intermediary, policy or fund. For instance, assets invested with a domestic-registered collective investment scheme (denominated in rands) should be disaggregated into the underlying asset categories and that portion of the asset category that is held in foreign currency or assets should be reported in column (2). This includes African assets acquired directly and is limited to 10% of total assets under management.


5.


Cash and deposits (A) includes: cash; Krugerrand; bank deposits; money market instruments; money market collective investment schemes; and margin deposits with SAFEX.


6.


Loans (B) includes: member loans secured by member’s interest in fund or by mortgage bonds; other mortgage bonds; loans to government and specified institutions; and any other loans.


7.


Bonds (C) includes: bonds carrying a government guarantee; bonds issued by local authorities and specified organisations; corporate bonds and debentures which are not compulsorily convertible; interest swaps; and any other bonds.


8.


Property (D) includes: immovable property; property companies; and property-based collective investment schemes.


9.


Equities (E) includes: listed and unlisted equities (ordinary and preference shares), including shares held in a participating employer; compulsorily convertible debentures; depositary receipts; equity-based collective investment schemes; and equity index-linked financial instruments (e.g., SATRIX). Equity in property companies is excluded (and included under category D). The sum of E.1 to E.5 should equal the total in E. Compulsorily convertible debentures and depositary receipts should be included under E.1, E.2 E.3 or E.4 as relevant. Private equity funds should be included in E.4 (unlisted equities).


10.


These assets should be specified in a schedule, which should be attached to the report, where they exceed 2,5% of the total fair value of the assets of the retirement fund. In the case of electronic reporting via the Portfolio Investment Reporting System details of other portfolio assets must be reflected in the comments field.


11.


Total portfolio assets is the sum of categories (A) to (F), including African assets.


12.


Subset of total portfolio assets as reported in row G that qualifies for 10% African allowance. Not necessary to specify the precise asset classes. Eligible African assets are included in the foreign assets reported under each class i.e. row A – F.


13.


Assets deemed foreign is calculated as the sum of rand-denominated foreign assets (reported in row G, column (2)) and foreign-currency denominated assets (reported in row G, column (3)) less row G1, columns (2) and (3).


14.


Assets deemed African is calculated as the sum of rand-denominated foreign assets (reported in row G1, column (2) and foreign-currency denominated assets (reported in row G1, column (3)).


15.


This is calculated as the rand amount in row H divided by the sum of columns (1), (2) and (3) in row G expressed as a percentage.


16.


Calculated as the rand amount in row I divided by the sum of columns (1), (2) and (3) in row G expressed as a percentage.