Overview

1. Presentation by ABSA Consultants and Actuaries (ACA)toPortfolio Committee on Finance on the practice of “bulking”

2. Services • Administration Services • Advisory Services • Actuarial Services • Asset Consulting Services Do not provide asset management services or risk underwriting Overview

3. Philosophy • Always act in the best interest of our clients • Not to obtain unjust / improper benefit from any client Relationship between administrator and retirement fund is normally a long standing relationship Overview

4. Bulking • ACA does not have any bulking arrangement with a bank • Each fund under administration is operated through its own current account • Client is not coerced into making use of ABSA Bank • Have clients who make use of other banks • Manage current accounts carefully Overview

5. Clients with ABSA Bank • Negotiated above average rates: ±2 - 3% above market rates • Funds do not pay bank charges Favourable dispensation for funds who make use of ABSA Bank Overview

6. Income and Cost Sharing • ACA is a wholly owned subsidiary of ABSA Group • Normal distribution of income and costs within the Group • Intergroup margin sharing arrangement through which a portion of the margin of the Bank is passed on to ACA in lieu of services rendered • Intergroup division of costs e.g. IT costs, Advertising costs, etc Overview

7. Income and Cost Sharing (cont) • Not unlawful • Not to the prejudice of any client / fund • Flexible Group arrangement – varies from time to time therefore cannot sensibly be disclosed • Does not form part of the fee for services provided to a fund • Intergroup distribution – ABSA Group as a whole does not derive any additional benefit Overview

8. Summary • No bulking • Funds can choose any bank • Negotiated favourable dispensation with ABSA Bank • Normal distribution of income and costs within the Group • ABSA Group not deriving any additional benefit • Funds are not negatively affected in any way Overview