POST RETIREMENT MEDICAL-AID (PRMA) SOLUTIONS

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1 POST RETIREMENT MEDICAL-AID (PRMA) SOLUTIONS

2 Post Retirement Medical-Aid (PRMA) Solutions

3 THREE The need Many entities have historically undertaken to subsidise the medical aid contributions of their staff upon their retirement. Whilst many of these schemes are now not open to new members, companies are still faced with obligations for pensioners and active members who qualified for the benefit. Whilst this is good for qualifying employees, these benefits can be onerous on employers, causing significant financial and administrative strain. As a result of these liabilities, companies are exposed to defined benefit obligation risks, which are similar to those of annuities typically managed by specialist insurers such as Liberty, and include: Longevity risk the risk that pensioners may live longer than expected. Investment risk availability of the required cash flows, and an appropriate investment strategy to offset the impact of the liability. Operational risk the risk that overpayments are made to the medical scheme in respect of pensioners who have passed away, as well as the administrative burden and expenses incurred. Introducing (I²) I², a division of Liberty Corporate, has developed a range of solutions that allow you to address the obligations associated with subsidising employee medical aid contributions and the consequent liabilities thereof. Providing cost efficiencies for the employer, whilst securing the future payments to the retirees, I 2 has a solution to suit your every requirement. As an insurer, I² focuses on accepting and managing annuity obligations and their related risks, and employs some of the top specialists in this field to do so. The result? You benefit from a solution that offers improved risk management and selective risk transfer implemented by some of the best in the business. POST RETIREMENT MEDICAL-AID (PRMA) SOLUTIONS

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5 FIVE The I 2 range A range of solutions is available when it comes to managing a PRMA subsidy. The most effective options generally consist of one (or a combination) of the following strategies: 1. Transfer of liability to pensioners (typically referred to as buy-out or settlement offer); 2. Applying asset-liability management principles; and 3. Transfer of liability to the extent possible to a third party. I 2 has solutions available to suit all three of these scenarios: I² Solution Investment PRMA Buy-out Strategy annuity annuity Buy-out Risk Transfer Asset Liability Matching There are also a number of options available in dealing with the PRMA liability. These include: An offer to Buy-out pensioners through: o An individual annuity, with the medical aid as the beneficiary, which is the I² pensioner PRMA policy. o An individual annuity with the member as the beneficiary. o A cash offer; Implement an I² PRMA Plan Asset and transfer the risks associated with the liability to the insurer. Implement an I² PRMA Plan Asset to cater for the entire liability and then from the Plan Asset offer a buy-out to the pensioners. Improve the funding of the liability on the balance sheet of the employer through asset liability matching with an Investment Strategy provided by I². More than just a service provider I 2 offers employers far more than the traditional liability and risk services, the competitive advantages of which can best be summed up in 6 key points: Choice we have a range of structures and solutions to best manage your Post Retirement Medical Aid obligations. Accessibility we have a dedicated team that is entirely client focused. Dynamism we are an experienced, agile, flexible and competent team, responsive to your requirements. Best fit we develop strategic, tailored solutions to ensure that the end product meets your needs. In order to achieve this, we keep abreast of the regulatory, tax, accounting and legal environments to ensure the relevancy of our offering. Buy with confidence we offer you the financial strength of the Standard Bank and Liberty Group, with market capitalisation well in excess of R160bn. A dynamic team Made up of some of the best minds in the business, we have the experts required to ensure that our solutions meet you every requirement. POST RETIREMENT MEDICAL-AID (PRMA) SOLUTIONS

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7 SEVEN Get in touch Nick Hibbit Tiaan Kotze Werner Van Wyk Ditebogo Malatsi For more information regarding our products, visit POST RETIREMENT MEDICAL-AID (PRMA) SOLUTIONS

8 For more information regarding our products, log onto The information contained in this document does not constitute advice by Liberty. Any legal. technical or product information contained in this document is subject to change from time to time. This document is a summary of features of the product. If there are any discrepancies between this document and the contractual terms or, where applicable, any fund rules, the latter will prevail. Any recommendations made must be taken into consideration regarding your specific needs and unique circumstances. Liberty Croup Ltd is an Authorised Financial Services Provider in terms of the FAIS Act (no. 2409). LIBERTY GROUP Ltd AlI rights reserved. RF 05/12