Information Circular 10 of 2007: Valuation Assumptions as at Surplus Apportionment Date

Board Members Dr CDR Rustomjee (Chairperson) AM Sithole (Deputy Chairperson) BM Hawksworth Ms JV Mogadime Ms AMM Mokgabudi Ms LM Mojela Prof PJ Sutherland Ms HS Wilton Executive Officer RJG Barrow Rigel Park 446 Rigel Avenue South Erasmusrand Pretoria 0181 South Africa PO Box 35655 Menlo Park Pretoria 0102 South Africa Tel +27 12 428 8000 Fax +27 12 347 0221 E-mail info@fsb.co.za Toll free 0800 110443 Internet http://www.fsb.co.za ENQUIRIES: MM du Toit D. DIALLING NO.: 012 428 8160 OUR REF: 12/12/1 FAX: 012 422 2994 DATE: 28 November 2007 E-MAIL: mariusdt@fsb.co.za (To all approved administrators, privately administered funds and insurers who underwrite pension funds) INFORMATION CIRCULAR PF NO. 10 OF 2007 VALUATION ASSUMPTIONS AS AT SURPLUS APPORTIONMENT DATE

1. This Circular takes effect when it is issued.
2. Circular PF117 sets out the standards for valuations to determine actuarial surplus
   at a fund’s surplus apportionment date.
3. Appendix A2, paragraph (a)(ii) of Circular PF117 refers. In terms of the proviso to
   the stated section, the current yield on fixed interest gilts must exceed the salary increase assumption, inclusive of price inflation and any allowance for merit and promotional increases, by at least 1% above age 40.
4. To clarify the intention of the proviso, it is replaced with the following:
   The net discount rate (i.e. yield on long-term fixed interest gilts, net of expenses, tax and any costs associated with maintaining a matched position) must exceed the salary increase assumption, inclusive of price inflation and any allowance for merit and promotional increases, by at least 1% above age 40.
5. In terms of section 15B(10), read with section 15B(9)(a) of the Pension Funds Act,
   No. 24 of 1956, as amended by Act 11 of 2007, a statutory actuarial valuation as at surplus apportionment date of a fund for the purpose of determining actuarial surplus in the fund may be considered unacceptable to the Registrar of Pension Funds to the extent that it does not comply with, inter alia, the amended proviso to Circular PF117. FOR REGISTRAR OF PENSION FUNDS