Max in Come Ref Guide Eng

OLD MUTUAL MAX INCOME December 2010 - For Internal use only 0
Secure A Maximum Income

For A Term | For Your Life | For Your Retirement
Reference Guide
MAX INCOME
Section Table of Contents Page

A Introducing Old Mutual Max Income 2

B Client Roles 4

C Generic Rules 7

D Income For Life 11

E Income For Life With Capital Preservation 19

F Income For Term 24

G Investment Funded Income 26

Prudential Investment Guidelines (PIGS Compliance) 33

H Investment Top-up 34

I Fees and Charges 37

J Marketing Support and Service / Administration 39

K Glossary 40

Important notes to the reader:
This Reference Guide is correct as at the date printed on every page. Updated pages will be provided, and
must be added to this Reference Guide.
Unless the context otherwise requires, the words denoting the masculine will also include the feminine and vice
versa.
The term advisers is inclusive of Old Mutual Personal Financial Advisers, Private Wealth Management, Bank
Brokers, Independent Brokers and Masthead.
This reference guide does not constitute advice. The information is of a general nature and should not be relied on as
a substitute for detailed financial planning.
Although reasonable care has been taken in compiling this guide, it may contain inaccuracies and typographical
errors. The information may become outdated. Old Mutual Life Assurance Company (South Africa) Ltd cannot accept
liability for any loss, damage or expense that may be incurred as a direct or indirect consequence of reliance placed
on this guide.
Where the contents of the clients Schedule and Terms and Conditions differ from the descriptions or definitions in
this guide, the Schedule and Terms and Conditions will prevail.

Section A Introducing Old Mutual Max Income

Simple and Easy to Max Income has been designed to be as simple as possible, as research reflected that most clients felt
Understand Offering income-producing investment products were far too complex and hard to understand.

Industry Leading Advice Old Mutuals 160 years of experience ensures that you are able to provide your clients with the best
possible advice.

Dedicated Advice Tool To support you in providing your clients with the best possible guidance, Old Mutual has
created a sophisticated yet easy-to-understand Max Income advice tool to measure their current and
future needs and ascertain the best solution for their income.

Market Leading Income Max Income has been innovatively crafted to provide market leading performance. With a
Solutions choice of features such as higher guaranteed income rates or lower investment charges and
no upfront charges (where applicable), it offers a highly competitive income solution for your clients
needs.

Customisable Flexible Everyone is different and needs change with time. That is why Max Income features multiple, easy-to
Solutions -understand options, allowing it be customised to fit your clients individual requirements.

Additional Options Max Income incorporates a number of additional options which can be applied to the core
solutions to allow for such things as inflation protection, capital preservation and securing an
income for a nominated beneficiary.

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MAX INCOME PRODUCT RANGE

Max Income can be purchased using the funds received from Retirement Annuities, Provident and/or
Pension funds (compulsory annuity) and / or using money received from other sources such as saving
plans, i.e. money from own funds (voluntary annuity).

Income From
Own Funds
Income From
Retirement Funds
Income For Term
(Term Certain Annuity)
Income For Life
(Life Annuity)
Investment
Funded Income
(Living Annuity)
(Voluntary) (Compulsory)
Section B Max Income

Client Roles Income From Retirement Funds (Compulsory Annuity)

Contracting Party / Member:
The Contracting Party is the owner of the plan.
All decisions and transactions on the plan must first be authorised by the Contracting Party / Member.

Life Covered:
Payment of the income will cease upon death of the Life Covered.
On the Income For Life the Contracting Party has the option of selecting a Joint Life option and / or a
Guaranteed Term. Both of the above options have the facility to continue to pay an income in the
event of death of the Life Covered.
On the Investment Funded Income, any remaining fund value will be made available to the
beneficiaries.

Income Recipient:
Income payments are made directly to the Income Recipient. The Income Recipient is also liable for
the payment of tax on the income received.

Note:
On an Income from Retirement Funds option, the Contracting Party, Life Covered and Income
Recipient will be the same person.

Additional Client Roles
Beneficiaries:
The Contracting Party can nominate beneficiaries to receive the income of the Max Income Plan
(if applicable) on death of the Life Covered or on the last dying of the Lives Covered.

Payee:
Should a court issue a Garnishee Order, Old Mutual will pay the / a portion of the income payment to
a third party.

Joint Life
Second Life Covered:
Payment of the income will continue until death of the last dying of the Lives Covered.

Second Income Recipient:
Will receive the income on the death of the first Income Recipient for the remainder of his / her life.

Note:
On an Income From Retirement Funds option, the second Life Covered will be the same as the second
Income Recipient.

Client Roles

How to apply the Client roles

Example 1

Mr John Smith retires and uses the funds received from his Old Mutual Max Investments Retirement
Annuity to purchase an Old Mutual Max Income, member owned Income For Life.

As the funds being used to purchase Max Income are from a compulsory source, Mr Smith will
assume the role of Contracting Party, Life Covered and Income Recipient.

However, Mr Smith also wants to ensure that Mrs Smith will continue to receive an income in the
event of his death; therefore, he selects the Joint Life option and nominates Mrs Smith as the Second
Life Covered and the Second Income Recipient.

Income From Own Funds Contracting Party:
(Voluntary Annuity) As the owner of the plan, all decisions and transactions on the plan must first be authorised by the
Contracting Party.

Life Covered:
On the Income For Life, payment of the income will cease upon death of the Life Covered. The
Contracting Party has the option of selecting a Joint Life option and/or a Guaranteed Term. Both of
the above options have the facility to continue to pay an income in the event of death of the Life
Covered.

On the Income For Term, payment of the income will continue for the entire term (irrespective of
whether or not the Life Covered is alive).

Income Recipient:
Income payments are made directly to the Income Recipient. The Income Recipient is also liable for
the payment of tax on the income received.

Note:
On an Income from Own Funds option, the Contracting Party, Life Covered and Income Recipient need
not be the same person.

Additional client roles
Beneficiaries:
The Contracting Party can nominate beneficiaries to receive the income of the Max Income Plan (if
applicable) on death of the first Income Recipient and second Income Recipient, if applicable.

Payee:
Should a court issue a Garnishee order, Old Mutual will pay the / a portion of the income payment to
a third party.


Client Roles Joint Life

Second Life Covered:
Payment of the income will continue until death of the last dying of the Lives Covered.

Second Income Recipient:
Will receive the income upon death of the First Income Recipient for the remainder of his / her life.

How to apply the Client roles

Example 2

Mr Smith is using the funds received from his endowment policy to purchase an Income For Term
(Income From Own Funds). Mr Smith will therefore assume the role of the Contracting Party.

However, as Mr Smith is receiving an income from his Income For Life option, he decides that
Mrs Smith should receive this income payment. Therefore, Mrs Smith assumes the role of the Income
Recipient.

At inception Mr Smith nominated his two children as beneficiaries on the plan. In the event of
Mrs Smiths (Income Recipients) death, the remaining income payments will be made to the
beneficiaries until the end of the remaining term.

Section C Generic Rules

New Business Submission requirements for Max Income Application Forms

Submissions 1. Fully completed Application Forms are required to avoid delays in issuing the products and
providing incomes.
2. The supporting documents, as detailed on the application forms, are to be submitted along with
the Application Form to the New Business area.
3. These supporting documents can include the confirmation of transfer/deposit, the income
recipients bank statement, a tax directive (if client wishes to provide proof of eligibility for a
lower tax rate) and the Recognition of Transfer document (external transfers for Income from
Retirement Funds).
4. The quotation used is not a submission requirement for New Business. This quote is purely for
illustrative purposes and the client should be advised that the actual income received may differ
from that illustrated. To get the same income, the plan needs to be issued in the same week as
the quote (to qualify for the same annuity rate), and the number of days between date of issue
and income payment start date must remain the same (to receive the same early interest).
5. Provision has been made on the application form for the policy number of Old Mutual Retirement
Annuity policies.
6. The detailed New Business process, available on request from the Old Mutual Distribution
Channel branches, is to be followed in order to avoid delays in issuing the products and providing
incomes.
7. The fund price / annuity rate applicable for the Max Income product/s will be determined once all
outstanding requirements for submission have been received and the plan is issued.
8. The contact details for submissions and queries are indicated in Section J of this reference guide.

Money collection

Income From Retirement Funds (Compulsory Annuities)
1. A completed New Business Application form together with a Recognition of Transfer (ROT) form is
submitted to the New Business area. This is a requirement with which the transferring fund
(external fund to Old Mutual) must comply.
2. The ROT is signed by a suitable representative of OMCS and sent back to the transferring fund.
Distribution Channel representatives have also been nominated as having authority to sign the
ROT. This responsibility includes making sure that a fully completed application form
accompanies the ROT, to avoid investment delays resulting from outstanding information, once
the funds are released from the external company.
3. Transfer into the Old Mutual Max Income bank account is made by transferring fund, upon receipt
of the signed ROT from Old Mutual (Distribution Channel branch or New Business area). The
transfer MUST be linked to a reference number and that reference number, together with the
amount, date of transfer and Max Income proposal/plan number must be reflected on the
Confirmation slip that is then submitted to the New Business area. This will assist with the
matching process for money to the appropriate Application Form instructions.
4. Failure to provide the transfer confirmation (e.g. EFT notification) may result in servicing and
investment delays.
5. Monies transferred into the Old Mutual Max Income bank account will not attract
interest, until all outstanding information for the New Business submission has been
received (e.g. fully completed and appropriate application form, confirmation of
transfer, bank statement for income payments, etc.) Queries relating to these business
rules will be referred back to the adviser concerned, for discussion and explanation to
the client.

Generic Rules

Income From Own Funds (Voluntary annuities)
1. Payments toward an Income From Own Funds (voluntary annuity) will be received via
Debit Order, directly from the clients bank
Deposit, into the Old Mutual Max Income bank account
Deposits involve any transaction which results as an entry on the Old Mutual Max Income
bank statement. These would include EFTs, cheque deposits and ATM transfers
2. A reference number MUST be used when Deposits are made. This reference number must be
reflected on the application form under the appropriate section, where provision has specifically
been made for it.
3. The reference number should consist of the proposal or plan number. This will assist in the
matching of the amounts to the appropriate Application Form. Where the proposal or plan
number is not available, the ID number of the Contracting Party should be used. Failure to
provide the appropriate reference number used for the deposit may result in investment delays.
4. Monies deposited into the Old Mutual Max Income bank account will not attract interest until all
outstanding information for the New Business submission has been received (e.g. fully completed
and appropriate application form, confirmation of deposit, bank statement for income payments,
etc.)

Income Payment

The plan start date is the date on which the plan is issued. The plan cannot be issued before all new
business application requirements have been met and the money appears in Old Mutuals bank
account.

Frequency of the income payment can be as follows:

Annually
Half-yearly
Quarterly
Monthly

For Income from Retirement Fund products, payment of the income will be made on any date, up to
1 month from the start date of the plan.

For Income from Own Fund products, where the payment frequency is monthly, income can be made
on any date up to 1 month from the start date of the plan. Where the frequency is quarterly, payment
can be specified within 3 months of start date, where half-yearly within 6 months and where annual,
within 1 year.

Amendments to the income frequency may only be elected on plan anniversary.

Payment of the income will be made via electronic transfer into the Income Recipients bank account
only. No third party payments will be made (except in the case of a Garnishee order); the account
should be held in the name of the Income Recipient.
Where incomes are suspended due to death or reversals received from the bank account, those
income payments will not attract interest for the period they are suspended.

Generic Rules

Tax deduction

Income tax is payable by the Income Recipient. To comply with legislation, Old Mutual has to deduct
income tax on an aggregated basis, across all Old Mutual income-providing products (annuity and
other, e.g. disability incomes) paid to the Income Recipient. The tax deduction is therefore based on
the total income being received from all Old Mutual annuities and is calculated as follows:

Old Mutuals internal tax system will determine the appropriate tax rate to apply for the
remaining months of the tax year in order to determine the total tax applicable.
This rate will therefore be adjusted monthly depending on,
- the income paid,
- the tax deducted for the year to date, and
- the projected future income for the remainder of the tax year.

It is often the case that the Income Recipient may have other taxable income sources not known by
Old Mutual and further tax deductions therefore apply. This means that the tax deducted by
Old Mutual may not accurately represent the Income Recipients actual tax liability.

Where this is the case, the Over deduction facility may be used to deduct more tax than calculated
by Old Mutual. An amount or percentage of tax may be specified for a certain tax year or to be open
ended (% only) and this specified rate will be used as long as it is higher than the rate calculated by
the aggregation program.

Tax directives

A Tax Directive is a statement received from the SARS allowing a certain tax rate to be used.

Should the Income Recipient have a tax directive allowing the deduction of a lower amount of tax, it
must be submitted. In such cases the specified amount of tax reflected on the valid Tax Directive will
be deducted and the income received will not be included in the tax aggregation calculation.

Tax Directives are currently valid for one year and application for these should be made annually to
ensure the relevant rate is applied.

Tax exemptions (Voluntary Annuities only)

The Income For Term and Income For Life options may receive a tax exemption for the capital
portion of the payment (section 10A of the Income Tax Act).
The exemption is available provided that the Contracting Party is a natural person and that the
income is payable to the Contracting Party or their spouse.

The capital portion will be determined according to the Income Tax Act and is calculated as
the value of the capital (cash consideration) divided by:
- the number of payments to be made (for an Income For Term option), or
- the expected number of payments to be made (for an Income For Life option
based on life expectancy of the Life Covered).

Generic Rules

Source of funds
Funds will be accepted for the Income options if received via the following sources:

Income From Own Funds (Voluntary)
Any non-compulsory money which is used to purchase a Max Income plan.

Income From Retirement Funds (Compulsory)
Retirement annuities,
Pension funds,
Provident funds (if fund rules permit the purchase of an income),
Transfers from other funds / insurers.

Reporting Values relating to the Investment Funded Income (Living Annuity) will be available from the
Old Mutual Client Service Centres. The details of these centres are reflected at the end of this
guide.
A plan anniversary letter will be posted to the Contracting Partys postal address, for confirmation
of the percentage or amount of income required on the Investment Funded Income products
(Living Annuity). This should be evaluated annually, according to the Income Recipients financial
needs and may be impacted by inflation and investment fund value considerations.
Bi-annual statements will be sent for all Max Income Plans
Information can also be obtained from the Old Mutual secure website, accessed via
www.oldmutual.co.za

Annuity Rates The annuity rates that are applied to an Income For Life or Income For Term, will vary weekly
due to movements in long-term interest rates. The Contracting Party will receive the rate applicable
for the week in which the plan is issued.

Section D Income For Life (Life Annuity)

The key factors your client should consider when choosing an INCOME FOR LIFE:

INCOME FOR LIFE

Does your client want a guaranteed income as long as they (or they and their partner) are alive?

Must the income be guaranteed against any market movements?

Does your client want to maximise the income available to them (and/or their partner) rather than leave money to
other beneficiaries on death?

Is the client prepared to sacrifice the capital in exchange for a guaranteed stream of payments, where the value
received depends on their lifespan?

Does your client not wish to take risks with their retirement income?

Income From
Own Funds
Income From
Retirement Funds
Income For Life
(Life Annuity)

Income For Life
(Life Annuity)
Income For Life (Life Annuity)

Overview
The Income For Life (Life Annuity) guarantees to pay an income for as long as the Life Covered (or a
second Life Covered) is alive.
The income received is determined by the lump sum contribution made upfront and the prevailing
annuity rates applicable at the time of purchase.

There is no capital value attached to the Income For Life option, but rather Old Mutual commits to pay
the Income Recipient a pre-determined schedule of payments, using up the capital in the process.
Old Mutual takes on the risk of the Life Covered living very long (mortality risk) and / or investment
returns being insufficient to provide the required income (investment risk).

Illustrated above is the single life Income For Life option chosen by Mr Smith. He receives a
guaranteed income for the duration of his life. The income payments cease upon his death.

The income payments being received can remain level (all payments received would remain constant)
or they can increase annually.

The Income For Life option is available on both the Income from Own Funds (voluntary) and the
Income from Retirement Funds (compulsory) options.

Income payment The income payment escalation options that are available are:
escalation options
Level
Fixed rate
Inflation-linked
Bonus (available only on the Income from Retirement funds option)

If an option with an escalation is chosen then the income payment increase will occur every
12 months (on the annual increase date).
The Contracting Party has the option of combining different escalation options to suit his/her
individual needs.

Income For Life (guaranteed annuity)

80
Death
Mr Smith
55
Income For Life (Life annuity)

The income payment remains constant throughout the payment period.
The level option provides the Income Recipient the highest possible initial income payment.
This is not a recommended option for clients who do not have any other source of income as the
income payment remains constant and does not provide protection against increases in the
cost of living (due to inflation).

Fixed Rate The income payment is increased annually at a pre-selected rate.
The income payment escalation rate can range between 1% and 8% (a whole number only).
The higher the escalation rate, the lower the initial income available. However, this provides a
greater level of protection against increases in the cost of living.
The Contracting Party assumes the risk that the fixed rate increase of the income payment may
not always be in line with inflation, as inflation could potentially be higher than the fixed rate
selected.
Where inflation is higher than the selected increase rate, the real value of the income will reduce
over time.

Level
Of Income
Years
Level
Of Income
Years
6 5 4
3 1
2
Level

Inflation-linked The income received is increased annually with the aim of keeping pace with the change in the
inflation rate.
The rate of the increase applied is based on CPI (headline inflation defined as the % change in
the consumer price index for the historical metropolitan areas).
The increase applied on annual increase date will be the CPI rate for the year, determined 3
months prior to the month of increase.
The income being received will always move in line with inflation.
Should inflation remain constant, or decrease, the income received will reflect this movement.
This option offers the client protection against increases in the cost of living.

Bonus (available only An initial guaranteed income is calculated. This income increases annually with bonuses that are
the Income from declared based mainly on performance of a portfolio of assets.
Retirement Funds Bonus declared may not be negative which means that the income is guaranteed never to
decrease.
A relationship exists between the initial income and future bonus earning capacity. For the same
capital amount, lower initial income is associated with the potential for higher future bonuses and
vice versa.
Based on the pricing interest rate used, the initial income will differ. The higher this rate, the
higher initial income and vice versa.
Only investment returns earned in excess of this pricing interest rate and fees are available for
distribution as bonuses.
Max Incomes bonus escalation option uses a 3.5% pricing interest rate. The rationale behind this
rate being chosen is to balance initial income level and the prospect for future bonuses. This
provides a level of protection against increases in the cost of living, but not a guarantee.
The funds are predominantly invested in equities and fixed interest assets, with a smaller allocation
to international assets, property and alternative assets.

Years
Level
Of
Income
Portfolio
performance
Years
Years
Level
Of Income
Increase
in CPI
Income
Level
Of Income
Level /
Decrease in
CPI
Income

Bonus (cont)

The level of income being received increases according to bonuses declared. During periods of poor
market performance the bonus declared may be 0%, in which case the level of income will remain
unchanged.

Bonus rates depend on the level of initial income, investment performance and the smoothing
principle applied by Old Mutual. This means that they are not constant and can be higher or lower
from year to year. The aim, when declaring the bonuses, is generally to ensure a stable return over
time, so that market volatility is absorbed as far as possible and not passed on to the policyholder.
This means that in years of exceptional market performance the bonuses declared will be lower than
the actual return (net of fees and pricing interest rate); as the difference is kept in reserve so that
higher bonuses than actual returns can be declared in years of poor market performance. Ultimately
the smoothing process takes the performance over a number of years into account.

Guaranteed Term The Contracting Party can choose to guarantee the income for a specified minimum term.
He / she will receive a guaranteed monthly income for the rest of his/her life or a specified period
(e.g. 10 years), whichever is longer.

Should the Life Covered die (soon after purchase), the income will still be payable for the remainder
of the term to the beneficiaries. Annual increases selected at inception of the policy will continue to
increase the income payment during the Guaranteed Term.

Choosing a Guaranteed Term reduces the initial income payable; however, it allows the client to
ensure that a minimum amount of value is received out of his/her capital investment.

Where the Contracting Party has a guaranteed term on a Joint Life option, and one of the lives dies
within the guaranteed term, the guaranteed income will continue to be paid in full for the remainder
of the guaranteed term, whereupon the revised income (if applicable, as described in next section)
will begin being paid.

The guaranteed term can be set at any number of years up to a maximum of 25 years, and
can only be specified upfront since it has a direct impact on the initial income.

Although Mr Smith dies at the end of year 5, an income will continue to be paid until the end of the
selected guaranteed term (10 years).

Income for Life (with a guaranteed term of 10 years)
Mr
Smith
10
Mr Smith dies
5

Joint Life Under a Joint Life the Contracting Party can select / nominate a second Income Recipient / second
Life Covered within the same plan.
The income payment is made for as long as either one of the chosen lives covered is still
alive.

Although this facility provides a lower income than the Single Life, it allows the Contracting Party to
also provide for another person (normally a spouse or civil union partner, but can be anyone else).

The Contracting Party can also specify a change in the level of income payable on death of either one
of the specified lives covered. The revised income can be any percentage up to a maximum of 100%
of the income received prior to death.

A different % can be specified for each Life Covered. For example, the income can be reduced to 70%
of the initial income on the death of the first life, and 50% of the income on death of the second life.
Annual increases (if selected upfront) will still take place.

The reduced percentage must be specified at inception of the policy, as this has a direct impact on the
initial income received.

Mr Smith selects an Income For Life on his and his wifes life. He nominated Mrs Smith as the second
Life Covered and second Income Recipient.
Upon Mr Smiths death (at age 63), Mrs Smith will continue to receive an income for the remainder of
her life at a reduced rate of 70% of the initial income payment.

Different Income As mentioned previously, Mr Smith nominated Mrs Smith as the second Life Covered and Second
Levels Available on the Income Recipient (Joint Life) when he purchased his first Income For Life. He also decided that the
Joint Life Option income payment must be guaranteed for a certain period and, as the monthly expenses would be
reduced upon either of them dying, the income payment which the surviving partner will receive
should be reduced to 70% of the initial income payment.

The option to reduce the income payment increases the initial income being received.

Upon Mr Smiths death, Mrs Smith will begin to receive the income payments. Because Mr Smith
selected a Guaranteed Term, the income Mrs Smith will receive will only decrease at the end of the
guaranteed term. Therefore, at the end of the Guaranteed Term the income payment Mrs Smith is
receiving will be reduced to 70% of the initial income payment.

63

5
5
Death
Mr
Smith
Mrs
Smith
Death
7
5
Level
Of Income
Years
Decrease in
income
Mr Smith
Mrs Smith
Guaranteed
term


Existing Business The calculation of the income payment is determined at inception of the plan, based on the type of
Changes Income For Life selected.

Therefore only the following changes are allowed:

Payment frequency
Beneficiaries may be changed (only by the contracting party).
Income Payment date changes can be processed at any time, but note only 1 income may be
paid per month, so a change in payment day from 10
th
to 25
th
would result in 45 days wait for the
month when the change is made. The reverse is also true, so moving from 25
th
to 10
th
would
mean only 15 days in-between incomes.

No other changes are permitted.

Fund Owned Income Fund owned annuities are no longer allowed.
For Life
Transfers from other retirement annuity, pension and provident funds must be purchased in the
name of the Contracting Party.
Where the Income For Life is fund owned, the trustees have the final decision on who the
beneficiaries will be.

Impact of Death on Income payment will stop upon death of the Life Covered
Income For Life option If the plan is within a guaranteed term or if a second Life Covered has been defined (Joint Life),
the income payment will continue (to beneficiaries) until the end of the guaranteed term (or to the
second Income Recipient) until death of the second Life Covered.


Commutation Income From Retirement Funds (Income for Life)
Pre-Death of Last Life Covered
The Contracting Party can commute a compulsory annuity for a lump sum payment if the
Contracting Partys Retirement Interest does not exceed R75 000 if no previous commutations
were taken or does not exceed R50 000 if previous commutations were taken.
Retirement Interest here refers to the original purchase price of any in-payment annuities and the
surrender value of all investments/policies held for a particular member in the Retirement
Annuity/Pension Preservation/Pension Fund in the build-up phase net of any amounts awarded to
the members ex-spouse(s) in terms of divorce or maintenance orders.
Post-Death of Last Life Covered
On death of the Last Life Covered within the Guarantee Term (if any) the nominated beneficiaries
can decide to commute the income payable for the remainder of the Guarantee Term.
Only full commutations are applicable to the Income from Retirement Funds Income for Life
policies.
The gross commutation value will be based on Old Mutuals commutation basis at the time of
calculation.

Income From Retirement Funds (Investment Funded Income)
Pre-Death of Last Life Covered
The Contracting Party can commute a compulsory annuity for a lump sum payment if the current
Fund Value of the Investment Funded Income contract does not exceed R75 000 if no previous
commutations were taken or does not exceed R50 000 if previous commutations were taken.
Post-Death of Last Life Covered
On death of the Last Life Covered the nominated beneficiaries can decide to commute the balance
of the Fund Value on the Investment Funded Income Contract.
Full and Partial commutations are allowed.
The gross commutation value will be equal to Fund Value at the commutation date.

Income From Own Funds
The Contracting Party and/or the final Income Recipient (if there are no beneficiaries after them)
can either opt for a full commutation or a part commutation on a voluntary annuity for a lump
sum payment.
The cash value will be based on Old Mutuals commutation basis at the time.
The nominated beneficiaries may commute the Income For Life upon death of the last remaining
Income Recipient within the guarantee term or if the Last Life Covered is still alive.
Income payments will stop upon death of the Life Covered (unless a Guaranteed Term is
selected).

Section E Income For Life with
Capital Preservation

Overview
The Income For Life with Capital Preservation is a special Income For Life option plus a Death
Benefit giving your client the option to preserve the capital, which is paid to the beneficiaries on
death of the Life Covered.
This option can only be purchased using Income from Retirement Funds (compulsory money).
It is a combination of a special compulsory purchase Income For Life (Life Annuity) and a Capital
Preservation Benefit (Death Benefit) with no underwriting, and the two parts may not be
purchased separately. The death benefit is structured similarly to the Greenlight lump sum death
benefit.
As no underwriting is required, the net income received may be slightly less than that which a
healthy life could obtain by purchasing two separate products. This means that this product is
best suited for:
- those in poor health and / or
- those who do not want to go for underwriting.
Upon death of the Contracting Party, the taxable retirement fund proceeds are converted into an
Income tax free lump sum for the beneficiaries (Capital Preservation Benefit). (The deceaseds
estate may, however, still be liable for estate duty.)
This option can only be purchased on its own and not as part of a composite structure.

For example, the Contracting Party may not purchase an Income For Life with Capital Preservation
along with an Investment Funded Income using the same source of funds.

Income From
Retirement Funds
Income For Life
(With Capital
Preservation)
Capital Preservation
Benefit
PLUS
Income For Life with Capital Preservation

Below are guidelines to purchasing the Income For Life with Capital Preservation:
Only a Level, Single Life, Income for Life with No Guaranteed Term may be purchased for
the income portion; this ensures that the income payments are as high as possible.
Given that this product provides a lump sum for beneficiaries, Joint Life and guaranteed terms
are not necessary.
The payment of the Capital Preservation Benefit is via a lump sum death benefit product, with no
riders or accelerator benefits available.

Income for Life (with a guaranteed Capital Preservation)

Mr Smith purchased the Income For Life with Capital Preservation. Upon his death (age 63), the death
benefit pays out a lump sum that can be equal to his capital investment in the Income For Life to his
beneficiaries.

Payment of the income will only cease upon death of the Life Covered at, which point the Capital,
Preservation benefit would be paid out to the nominated beneficiaries.

The minimum investment amount is R50 000.

There is no maximum investment amount.

Income Payment Income payments will only be made on a monthly basis (no frequency changes allowed).
frequency

The Life Covered is the person whose life is insured.
There can only be one Life Covered.

Note:

The Contracting Party will also be the Life Covered.

Mr
Smith
Capital
Preservation
Benefit
55
63
Death
Mr
Smith
55
Lump Sum paid to
the beneficiaries
on death
Income Payment
cease event
Investment amount
Life Covered
Capital Preservation Benefit

Cover will commence on the later of:
- the date on which Old Mutual issues the benefit; or
- 30 days prior to the selected first premium due date,
even if no income has been paid and if no premiums received on the Capital Preservation Benefit.

Maximum Entry Ages: 80nb
Maximum Entry Ages: 80nb
Benefit cease age: N/A
The benefit will cease on the death of the Contracting Party.

The full income payment (less Income Tax payable and the premium for the Capital Preservation
Benefit) will be made into the Income Recipients bank account via an electronic transfer.
Because the Capital Preservation Benefit premium is being deducted directly from the after tax
income, the benefit can never go paid-up.

Exclusions There are no exclusions to the Capital Preservation Benefit.

The following changes are allowable:
The level of death cover may be reduced.

Claims documentation Only a copy of the death certificate is required at claims stage.

Claim payment process Payment of the claim will be made into the bank account of the beneficiaries specified by Contracting
Party.

Capital Preservation Cover limits
The minimum cover amount is R50 000.
The Contracting Party may choose a Capital Preservation Benefit lower than the capital
investment amount but not higher.

Cover pattern

Only the Level cover pattern is available.

Cover start date
Age limits
Payment of premiums
Existing business
changes
Benefit Limits and
patterns
Capital Preservation Benefit

Premium payment Premium Frequency

Premiums are payable on a monthly basis.

Premium Term

Premiums are payable for whole life.

Premium pattern

Only level premiums are available.

Premium guarantees

Premiums will be guaranteed for 10 years and may be reviewed thereafter.

The death benefit will never lapse because the Capital Preservation Benefit premium is being
deducted directly from the after-tax income.

No loans or withdrawals can be made against the Capital Preservation Benefit.
The Contracting Party can terminate the Capital Preservation Benefit and continue only with the
Income for Life; however, this is not recommended as you may not change your choice of
Income For Life and it wont provide the same income as a normal Income For Life since this
option is priced as a bundle.
- Cancelling the Capital Preservation Benefit will increase the net income payment by the
amount of the premium that will no longer be deducted.

No commission is payable on the Capital Preservation Benefit (death benefit).
This is because commission is already paid on the full capital amount transferred from the
retirement fund, and ensures that the remuneration for this option is consistent with the other
Income For Life options (for example, adding a Guaranteed Term).

Lapse

Withdrawals
Adviser Remuneration
Section F Income for Term

The Income For Term (Term Certain Annuity) pays the Income Recipient a fixed income for a
specified term, whether or not the Life Covered is alive.
This option can only be purchased with voluntary money (from own funds).

By selecting a fixed income term, Mr Smith is ensuring that the income payment will continue until
the end of the specified term.

Income For Term (term of 10 years)
Mr
Smith
10
Income From Own
Funds
Income For Term
Overview
Income for Term (Term certain annuity)

Income Payment The income payment escalation options that are available are:

Escalation Options - Level
- Fixed rate (any whole number between 1% and 8%)
- Inflation-linked

If an option with an escalation is chosen then the income payment increase will occur every
12 months (on the annual increase date).

Minimum term: 5 years
Maximum term: 25 years

The following changes are allowable:
Payment frequency.
Income Payment date changes can be processed at any time, but note only 1 income may be
paid per month, so a change in payment day from 10
th
to 25
th
would result in 45 days wait for the
month in which the change is made. The reverse is also true, so moving from 25
th
to 10
th
would
mean only 15 days in-between incomes.

No other changes are permitted.

The income payment is made for the full duration of the term and does not cease on death of the
Life Covered.

The Contracting Party can fully commute the income payments for a lump sum payment (plan
cancellation).
The Contracting Party can partly commute the income payments for a part lump sum (future
income payments will be reduced).
The cash value for a full/part commutation will be based on Old Mutuals commutation basis at
the time of calculation.
The beneficiaries may commute the Income For Term option upon death of the last remaining
Income Recipient, or
The last remaining Income Recipient can exercise the same option (commute the Income For
Term), if there are no other beneficiaries after him / her.

Income payment
term
Existing Business
Changes

Impact of Death
Of the Life Covered
Commutation
Section G Investment Funded Income
(Living Annuity)

INVESTMENT FUNDED INCOME

Is there a need to be able to alter the level of income drawn on an annual basis?
Is your client prepared to take the risk that poor market performance will negatively impact on future income from their
investment?
Does your client want to draw a variable income from their retirement funds, with any fund benefits available to the beneficiaries on
death?
Is your client prepared to take the risk that their retirement capital may reduce, and therefore their income may be insufficient,
especially if they take too high an income?
(Life Annuity)
(Living Annuity)
Income From Own
Retirement
Investment Funded
Income
(Living Annuity)

Investment Funded Income (Living Annuity)

Overview The Investment Funded Income option (Living Annuity) pays an income based on the performance
of the underlying investment funds selected.

Old Mutual Max Income offers a range and choice of Investment Funds / unit trusts, including options
specifically designed to generate lifelong income. These funds are the Wealth Defender Income Fund
and the Capital Defender Income Fund.

The Contracting Party has flexibility in terms of the investment funds selected and the level of income
received (subject to certain restrictions Section 28 of the Pension Funds Act).

Upon death any remaining fund value will be made available to the beneficiaries.

The Investment Funded Income option also offers the Contracting Party a 100% allocation option.
This means that the Contracting Party does not pay any upfront investment fees / charges and has
the benefit of his / her total contribution being invested (unless certain external unit trust funds are
chosen).

No guarantees as to the level or duration of income are offered in the Investment Funded Income
option. The Contracting Party is, however, able to select an investment fund which can provide a
guarantee at the investment fund level. The Contracting Party carries all investment and mortality
risk.

Examples of the risks that may be experienced by the client are:
The Contracting Party may outlive his / her capital.
The returns may be insufficient to sustain the income payment required as the fund value
begins to be depleted.

The long-term income available to the Income Recipient depends on the performance of the
investment funds. If the income drawn exceeds the market performance, the income will begin to
deplete the capital amount. If the income is maintained at this level, a greater portion of the fund
must be drawn and the remaining capital will decrease at an increased rate. In the long term this can
impact on future income. The level of income can be reduced in the future to protect the capital
during periods of poor market performance.

Level
Of
Income
Years
Poor market
performance
Years
Good market
performance
Level
Of
Income

The maximum Income Percentage rate is restricted by regulation (as amended from time to
time) and by Old Mutual Max Income product rules.
These limits are subject to any regulatory changes.
The Income Percentage rate is converted to an annual fixed income amount and is paid according
to the frequency specified.

Change in Income At policy Anniversary

Three months prior to the anniversary of the plan a letter will be forwarded to the Contracting
Party requesting him / her to review their income requirements.
Income Payments are calculated by multiplying the Income Percentage Rate by the Fund Value
on the Anniversary Date.
Client can also specify a Rand amount, but well check that the % limits are not breached.
If the Contracting Party cannot be contacted prior to their policy anniversary or they dont return
instructions, the default action will be to use the same percentage as specified in the current year
to calculate the income for the following year.

Note: Changes to draw down rates will only be accommodated on plan anniversary

The Investment Funded Income option provides a choice of a wide range of Investment Funds.
Unless specific Investment Funds have been selected to disinvest from, deductions for payment
of the income will be made proportionately across all funds.
The Contracting Party can allocate funds to and/or choose to disinvest from a Money Market
Investment Fund. This functionality serves a similar purpose to that of an Income Management
Account.
Should the Contracting Party reach a point where the fund(s) from which the income is drawn
becomes depleted, the default action will be to deduct the income payment from the remaining
investment funds proportionately.
Distributions from unit trusts will automatically be reinvested.
The client is able to change the investment funds from which the income payment deductions are
taken, at any point.

The advice tool will recommend funds within the Investment Funded Income option, depending
on the level of income required by the client.
Old Mutual will back the recommended Investment Funds if the advice process is followed.

The Core recommended Investment Funds
Low current income, capital preserved in real terms: Wealth Defender Income Fund
High current income, capital preserved in nominal terms: Capital Defender Income Fund

Alternative recommended Investment funds
Low current income, capital preserved in real terms: SYmmETRY Balanced Fund of Funds
High current income, capital preserved in nominal terms: SYmmETRY Fixed Interest Fund of
Funds

A full extended range of Investment Funds will also be available (refer to Investment Fund list).

Investment Fund
Choice
Income Levels
Recommended
Investment Funds

Low Current Income

Optimised Balanced Fund
This fund may suit investors seeking an optimal balance between capital growth and security. The
fund's asset composition consists of a diversified range of blue chip JSE and international equities and
a minimum holding of 25% of the fund in SA and international interest-bearing assets, which aims to
reduce the risk of the fund. This fund complies with Prudential Investment Guidelines. In order to
achieve the fund objective the portfolio manager may choose to gain exposure to the described assets
and asset classes by investing through OMLACSA pooled portfolios, collective investment schemes or
a combination thereof.

Optimised Defensive Fund
This fund may suit investors seeking a more stable investment with reduced exposure to equities
(targeted maximum of 30%). Significant holdings in cash, local and international interest-bearing
securities and large capitalization local and international equities, reduce the risk of the fund. In order
to achieve the fund objective the portfolio manager may choose to gain exposure to the described
assets and asset classes by investing through OMLACSA pooled portfolios, collective investment
schemes or a combination thereof.

SYmmETRY Balanced Fund of Funds
This is a flexible asset allocation fund aimed at long term capital growth, with a bias towards absolute
returns and capital preservation. The flexible mandate is employed to allow the portfolio to be biased
towards absolute returns and capital preservation in the shorter term. Over longer periods the fund
attempts to produce significant inflation-beating returns. This is achieved through stock selection and
an asset allocation strategy capable of achieving the performance target. The fund conforms to the
legislation governing retirement funds.

Wealth Defender Income Fund
The fund aims to support a post-retirement income level of 5% of capital per annum and to grow the
underlying capital in line with inflation (CPI). The manager has the flexibility to invest across local
asset classes including Alternative Investment Strategies (to a maximum of 30%) to enable it to
generate income whilst maintaining a capital and absolute return focus.
The fund may be exposed to limited, short term (18 months) volatility in the level of income that it
generates or in its capital value. Although the fund aims to preserve capital, capital depreciation in the
short term is possible.
The fund is likely to outperform traditional long-only equity funds during sideways or falling markets
and may underperform during rising markets.
The fund will be managed to comply with the Prudential Investment Guidelines as prescribed under
the Pension Funds Act.
This fund is only suitable for the sophisticated investor who is willing and able to accept the risks
associated with having a proportion of their assets invested in Alternative Investment Strategies. In
order to achieve the fund objective the portfolio manager may choose to gain exposure to the
described assets and asset classes by investing through OMLACSA pooled portfolios, collective
investment schemes or a combination thereof.

High Current Income

Capital Defender Income Fund
The fund aims to deliver the maximum level of income that will not erode capital in nominal terms. In
order to achieve this, the manager primarily invests in shorter duration (less than 2 years) bonds to
maintain the core capital stability of the fund.
The manager may also invest in quoted property and Alternative Investment Strategies in order to
enhance the current income yield of the fund.
Core Investment Fund
Descriptions
The fund may be exposed to limited, short-term (1 year) volatility in the level of income that it
generates or in its capital value. Although the fund aims to preserve capital, capital depreciation in
the short term is possible.
In return for accepting some volatility, the total return in this fund may be higher than that of cash
funds over the medium term (3 years +). However, the fund is not likely to protect against inflation
over the medium term. The fund will be managed to comply with the Prudential Investment
Guidelines as prescribed under the Pension Funds Act.
This fund is only suitable for the sophisticated investor who is willing and able to accept the risks
associated with having a proportion of their assets invested in Alternative Investment Strategies. In
order to achieve the fund objective the portfolio manager may choose to gain exposure to the
described assets and asset classes by investing through OMLACSA pooled portfolios, collective
investment schemes or a combination thereof.

Marriot High Income Fund of Funds
The portfolio is an income fund of funds. The objective of the portfolio is to have as its primary
objective a high yield combined with the protection of the value of the capital invested with a
secondary consideration being growth in income.
Investments normally to be included in the portfolio will, apart from assets in liquid form, consist
solely of participatory interests in portfolios of collective investment schemes registered in the
Republic of South Africa or of participatory interests or other similar schemes operated in territories
with a regulatory environment which is to the satisfaction of the manager and trustee of a sufficient
standard to provide investor protection at least equivalent to that in South Africa.
To this end and from time to time, investments will be held in fixed interest based portfolios, other
income based portfolios, high yield equity based portfolios and high property- equity based on
portfolios, in order to attain the primary objective of the fund.
Nothing in the Supplemental Deed shall preclude the manager from varying the ratios of securities, to
maximise capital growth and investment potential in a changing economic environment or market
conditions or to meet the requirements, if applicable, of any exchange and from retaining cash or
placing cash on deposit in terms of the Deed and the Supplemental Deed, provided that the manager
shall ensure that the aggregate value of the assets comprising the fund of funds shall consist of
securities of the aggregate value required from time to time by the Act and the assets in liquid form.
The manager will be permitted to invest on behalf of the portfolio in offshore investments as
legislation permits.
The trustee shall ensure that the investment policy set out in this supplemental deed is carried out.

For the purpose of the Marriott High Income Fund of Funds, the manager shall reserve the right to
close the portfolio to new investors. This will be done in order to be able to manage the portfolio in
accordance with its mandate. The critical size shall be determined from time to time by the manager.

SYmmETRY Fixed Interest Fund of Funds
This is a multi-managed domestic fixed interest fund. It is primarily aimed at investors seeking high
levels of income with a possibility of capital appreciation over the long term. The Fund aims to
produce returns superior to those of domestic income unit trust funds in the medium to long term. In
order to achieve this, the investment mandate allows investment managers to invest in the entire
spectrum of interest-bearing securities and listed property, etc.

The minimum investment amount into the Investment Funded Income Option is R500 000.
This minimum can be lowered to R50 000 if the client declares that income is also being received
from another source.

Minimum investment
amount

Transfer into the Investment Funded Income option from another Living Annuity is allowed
(Directive 135A / Section 14 if from a Fund Owned annuity).

Transfer into the Investment Funded Income option from another Living Annuity is allowed
(Directive 135A / Section 14 if from a Fund Owned annuity)
Upon Directive 135A transfer no initial Adviser Fee is payable.

Transfer out of the Investment Funded Income option is allowed provided the client doesnt have
an Income For Life portion or an Investment Top-Up benefit (Directive 135A).
There may be initial adviser fees and admin expenses that have been paid but have not yet been
recovered.
This is because these expenses are recovered by an ongoing asset charge over time (as a result
of 100% allocation).
Therefore, a Transfer Fee (as shown below) is deducted from the amount transferred to recover
any expenses that may not as yet have been recouped.
The Transfer Fee will be waived where the funds are transferred out within 6 months of the date
of death of the Contracting Party.

As an example, the maximum Transfer Fee payable is:

Where the initial commission is reduced, the Transfer Fee will reduce accordingly.

Year of

transfer out
1 2.2% of Fund Value
>
10
-

Transfer into
Investment Funded
Income
Transfer out of
Investment Funded
Income

No Fund Owned Investment Funded Income options will be allowed.
The Contracting Party will own the plan and will take full responsibility for the Investment choice.
The Contracting Party has control of investment funds and the level of income received.

Various options will be made available to the beneficiary on death of the Contracting Party.
The appropriate choice will vary depending on the needs of the beneficiary, and possibly the
differing tax impacts of the options.

Death of the Contracting Party on an Investment Funded Income option are as follows:

Option 1
The beneficiaries can receive an Income For Life purchased from Old Mutual or from any other
Registered Insurer.

Option 2
The Beneficiaries can purchase a Living Annuity from Old Mutual or any other Registered Insurer
on the life of the Beneficiary.

Option 3
The beneficiaries can choose to receive an income over a 5-year period.

Option 4
Where permitted by the relevant authorities, commute the Max Income Investment Funded
Income Plan in full or in part.

Option 5
The beneficiaries can select any combination of the above options.

Switches Between Investment Funds
The client can switch between investment funds at any time although Prudential Investment
Guidelines (PIGS) compliance should be maintained.
Switching between Investment Funds is currently free; however, certain external Unit Trust
Investment Funds have a 0.25% (+ VAT) initial Unit Trust fee of the amount switched into the
fund.

Into the Investment Top-up option
Clients who may not initially want to purchase an Investment Top-up option have the facility to
switch into this option later.
By switching into the Investment Top-up option the Contracting Party is guaranteed a payout
should they survive to the specified duration protection against longevity.
This switch can be done at any time. Income being received from the Investment Funded Income
at this stage will reduce pro-rata to the % switched into the Investment Top-up.
Any switches will be subject to the minimums applicable within the Investment Top-up option
which is currently R5 000, as well as the maximum which is 8% of Fund value.

No Fund Owned
Investment Funded
Income
Death of the
Contracting Party


Switches (cont) Into the Income for Life option
Clients who may not initially want to purchase an Income For Life option have the facility to
switch into this option later, e.g. clients not wanting to lock into the current annuity rate or
clients wanting to have exposure to the market for an additional few years.
By switching into the Income For Life option the Contracting Party is guaranteed an income for
the remainder of his / her life.
This switch can be done at any time. Income being received from the Investment Funded Income
at this stage will reduce pro rata to the % switched into the Income for Life.
Any switches will be subject to the minimums applicable within the Income For Life option which
is currently R10 000.
As the Investment Funded Income option offers the Contracting Party a 100% allocation option, a
transfer fee is payable on any funds transferred within the first 10 years of the investment. This
allows initial expenses to be recouped.
Initial expenses will not be charged on the Income For Life Option on a switch in as they would
have already been recovered.
Switches into the Income for Life with Capital Preservation Option are NOT allowed.

PIGS Compliance (Prudential Investment Guidelines) Regulation 28 of the Pensions Fund Act

These guidelines will be followed by Max Income to ensure that the Investment Funded Income
fulfils its intended function of providing a long-term income.
Compliance will be monitored at a portfolio level (i.e. where a client has a combination of non-
compliant funds).
PIGS Compliance will be checked and adhered to at new business stage as well as
- on any switches
- on policy anniversary.

Corrective steps to ensure that a client remains PIGS compliant
If a client is found to be in a non-compliant situation, Old Mutual will notify the adviser and client.
Information will be supplied highlighting which aspect of the regulation has been exceeded.
The client will be requested to change the investment allocations to become compliant.
The client and adviser will be informed, via ongoing reports, of the status of the compliance on
the policy.
No default action will be followed.
It is therefore the responsibility of the adviser to ensure that the client is compliant.
Old Mutual will be able to revise a clients portfolio to ensure compliance, but this action will only
be applied in extreme circumstances and without instruction from the client.


PIGS Asset Restrictions

Asset Classes and Exposure Limits

Below are the Asset Classes / Categories affected by Regulation 28:

Any of the above asset categories can either be classified as Onshore or Offshore (local and
foreign). The exposure limit will also be affected.

The Exposure Limits are as follows:
Interest Bearing Assets, the total exposure limit is 100%. This means that the client can invest
100% into an interest bearing investment fund. The offshore limit is restricted to 15%.
Equity exposure is restricted to a maximum of 75% (local) and to 15% offshore.
Exposure to Property is restricted to a maximum of 25% (local) and to 10% offshore.

Should both Equity and Property be selected, the total exposure for both local and offshore may not
exceed 90%.
The total offshore exposure is also limited to a maximum of 15%.

Category

Typical Funds

Interest Bearing Assets Gilt, Bond, Income and Money Market funds and bank accounts
Equity (excl. Listed Property) Equity, Specialist, Value and Growth funds
Property (incl. Listed
Property)
SA Quoted Property, Property Equity funds
Other

Non-linked policies, i.e. any fund with some form of capital
guarantee like the Smoothed Fund and Secured Fund
Section H Investment Top-up

Overview Investment Top-up pays a lump sum to the client on survival to an age elected by the Contracting
Party. This benefit serves as a protection benefit against longevity by providing additional funds at a
stage when the client may need an increase in income or an additional source of capital to fund an
income.

This benefit is offered only to clients who have a portion of their investment in underlying Investment
Funds (i.e. clients who have an Investment Funded Income).

The benefit can be purchased at the inception of the Investment Funded Income or at any time
thereafter.

Investment Funded Income (with the Investment Top-up option)

Mr Smith purchased an Investment Top-up at inception of his Investment Fund Income.

By age 85 the capital amount has reduced due to poor market performance and high income
payments. Due to him living longer than expected, the income payments being received begin to
reduce; however, the cost of living increases due to the increases in inflation.

At age 85, an injection of additional capital is added into his Investment Funded Income. The new
level of capital increases Mr Smiths income payment level to help keep pace with the increased cost
of living.

8
5
Mr
Smith
5
5
Additional Funds added
to Investment Funded
Income
Income From
Retirement Funds
Investment Funded
Income
Investment
Top-up
Investment Top-up

Legal Structure
The benefit is only available in conjunction with an Investment Funded Income (Living Annuity)
investment.
The benefit will be funded by a single amount deducted from the Investment Funded Income
capital (i.e. it will not be paid out of post-tax income).
The benefit will be paid out into an investment fund within the Investment Funded Income
specified by the client (the default is the Secured Money Market Investment Fund).
Normal restrictions on Investment Funded Income withdrawals (income payments) will therefore
apply when accessing the benefit after payout (the client will not be able to access the full capital
payment).
No additional commission is payable to the adviser on the Investment Top-up.
Transfer out of the Investment Funded Income via Directive 135A where the client has an
Investment Top-up is not permitted.

Investment Top-up provides a guaranteed benefit.
The client will be able to choose between a guaranteed nominal benefit and a benefit that grows
with inflation.

The cost of the Investment Top-up benefit depends on the term selected prior to the benefit
being paid.

Term and Age Term of the Investment top-up Benefit
restrictions
The survival term ranges from 15 to 30 years.
75 is the earliest age at which the benefit can be made payable.
95 is the latest age at which the benefit can be made payable.
The terms have been set to ensure that the benefit offers sufficient value for money.

The cost is limited to ensure a reasonable income is still payable from the remaining Investment
Funded Income.
This is done to prevent the retirement capital being depleted prior to the Investment Top-up
benefit being payable.
The cost is limited to 8% of the initial Investment Funded Income capital (or remaining capital
where this is a switch from existing Investment Funded Income).

The minimum contribution toward the Investment Top-up benefit is R5 000 (single premium
only).

Benefit Options Benefit Options
Term and Age
restrictions

Maximum contribution
Minimum contribution
Investment Top-up

Proof of life is required prior to the benefit being paid.
This can be done via a Certificate of Existence, which is available from Old Mutual.
This information would have to be certified by a Commissioner of Oaths prior to it being
submitted.

On death of the Contracting Party the Investment Top-up does not form part of the Investment
Funded Income.
The Investment Top-up benefit ceases.

Requirements at
Claims stage

Impact of Death
Of the Contracting Party

Section I Fees and charges

There will be no initial / upfront charges
1
for the Investment Funded Income Option.
A Plan Charge will be taken as a % of fund value each month.
The Plan Charge will reduce as fund value increases.
Fund Value is determined with reference to all Max Income Investment Funded Income plans held
by the contracting party.
i.e. Max Income will apply client based charging.
This provides clients with a more competitive charging structure, ensuring that value for money is
received.
The Plan Charge will vary according to the fund size, the investment fund chosen and the level of
upfront and ongoing adviser fee agreed by the client and the adviser.
The charges will be taken proportionately across all investment funds.

The MAXIMUM Plan Charge for Old Mutual Funds is indicated in the table below:
The Plan Charge reduces directly where the level of upfront or ongoing adviser fee agreed by the
client and the adviser reduces.

Fund Value Total Plan Charges p.a.

First R1.13 million

1.75%
Next R1.13 million 1.68%
Exceeding R2.26 million 1.60%

Asset management fees are included in the unit price of the Investment Fund(s) and are
deducted from the Investment Fund(s) selected; these fees are detailed in the quotation.
The fee varies from Investment Fund to Investment Fund.
Performance Related Fees may be levied on certain Investment Funds in the same way as Asset
Management Fees.
Performance related Fees are only levied when those fund(s) outperform their prescribed
benchmark(s).
The fees are dependent on the Investment Fund(s) chosen by the client.
(Can be viewed in a personalised quotation.)

1
Unless the client selects certain unit trust funds that have an initial unit trust charge
Product Charges
(Investment Funded
Income only)
Asset Management Fees
(Investment Funded
Income only)

Fees and charges

Where certain external unit trust funds are chosen by the client, an initial charge of 0.25%
(0.29% VAT inclusive) is taken from the initial investment into the fund.
In this case, the client will be subject to this charge and will not enjoy 100% allocation on his/her
investment.

Adviser Remuneration Maximum initial adviser fee
The maximum initial adviser fee payable to the adviser is 1.5% of the investment amount
(1.71% VAT inclusive).
The initial adviser fee agreed with the client may vary between 0% and this maximum.

Ongoing Adviser fee (Investment Funded Income only)
The maximum ongoing adviser fee payable is 1% per annum (1.14% VAT inclusive).
This fee is paid on a monthly basis by Old Mutual Investment Services (OMIS) to the adviser for
performing certain functions as set out in section 7 of the application form.
The ongoing adviser fee agreed with the client may vary between 0% and this maximum.
This fee is included in the Plan Charge and can be reviewed at any time subject to approval by
both client and adviser.

Asset Management Fees
Asset Management and Performance Related Fees are included in the unit price of the Investment
Fund(s). These fees are dependent on the Investment Fund(s) chosen and are detailed in the
personalised quotation.

All ongoing admin and advice charges, except for a reduced Plan Charge, are included in the Asset
Management Fee. These ongoing charges include the following:
Ongoing Administration Fee of 0.55% p.a.
Ongoing Adviser Fee of up to 0.75%, payable to the adviser by the Management Company.

The reduced Plan Charge is based on initial adviser fees and admin expenses paid but not yet
recovered.

Initial Unit Trust charge
(Investment Funded
Income only)

Charges when C-Class
funds are elected
(Investment Funded
Income only)
Section J Marketing Support and
Service / Administration

1. Marketing Support

The following marketing support has been designed to assist you in marketing Old Mutual Max Income.

Available from the UTI Mounties Warehouse:

1.1 Printed Marketing Support:
Product Overview Foldout
Client Product and Retirement Brochures
Quarterly Fund Performance Guide
Sales aids

1.2 Electronic Support:

Information regarding Old Mutual Max Income will also be available on the following websites:
For clients: www.oldmutual.co.za/max
Gateway for distribution channel use: gateway.oldmutual.co.za

2. Service Centre

The primary objective of the Old Mutual Client Service Centre is to administer the entire investment cycle of the offering. The
Service Centre will administer all requests from advisers and clients via telephone, faxes and Internet e-mails, negating the use of
traditional postage. It is imperative that all requests of a monetary nature be dealt with the same day.

The Servicing Model is detailed in a separate document. In summary, capture of new business will continue to be done by the
same area as is responsible for other new generation retail products. It is important that key intermediaries, with large Living
Annuity clients, who have up until now, dealt with the Fairbairn Capital service centre for this product set, experience as good or
superior service from the new servicing model.

The Service Centre is staffed by highly trained employees who are capable of providing a professional service on all aspects of
investment administration. In addition, we are using leading-edge technology enabling us to meet stringent service standards,
thus ensuring world class service to our clients.

2.1 Contact Details

Telephone number for Advisers: 0860 60 3500 Fax numbers: 0860 60 7500
Telephone number for investors: 0860 60 5500 0860 60 9500
E-mail: MaxIncome@oldmutual.com

2.2 Physical and Postal address

Physical address: Mutualpark Postal address: P O Box 4512
Jan Smuts Drive Cape Town
Pinelands 8000

Section K Glossary

Investment Funded Income Pays income based on the performance of the underlying
investment funds (Living Annuity).

Income For Life Guaranteed to pay an income for as long as the Life
Covered (or a second Life Covered) is alive (Life Annuity).

Income for Term Pays a fixed income for a specified term (Term Certain
Annuity).

Guaranteed Term Is the term during which the income is payable even if the
Life Covered is deceased.

Bonus Escalation Is based on the performance of the underlying portfolio.
The income received increases annually via a bonus
declaration.

GN18 Transfer An agreement to allow a Retirement Fund to purchase an
income from an insurer in the name of and on the life of the
member who is retiring from employment.

Directive 135A A transfer of an in payment living annuity with one insurer
to a Living Annuity, Income for Life or Income for Life with
Capital Preservation Benefit with another insurer.

Section 14 transfers A process to allow a transfer from an in payment annuity to
another fund, or from a fund to a member owned annuity.

Retirement To terminate an employees employment upon attainment
of the legally pensionable age, or the pensionable age
established by a companys pension scheme.

Consumer Price Index (CPI) An index of prices of a basket of goods used to measure
the change in the cost of basic goods and services over
fixed time, generally 12 months.

Inflation The rate of increase in the overall level of consumer prices
over a fixed period, generally 12 months. Typically closely
linked to CPI.

Voluntary funds The clients own money which is used to purchase an
income which is not Pension / Provident or Retirement
money.

Compulsory funds Funds received from Retirement Annuities, Provident and /
or Pension funds

Joint Life option Provides the Contracting Party with the option of selecting /
nominating a second Income Recipient / Life Covered within
the same annuity.
This would ensure that the income payment is made for as
long as either one of the chosen lives covered is still alive
or until the end of the Guaranteed Term (if applicable)
whichever is the later.

Single Life option Income Payments will continue until the death of the Life
Covered or until the end of the Guaranteed Term (if
applicable) whichever is the later.

Investment Top-up Investment Top-up pays a lump sum to the client on
survival to an age elected by the Contracting Party.


Glossary

Income for Life with Capital
Preservation The Income For Life with Capital Preservation is the Income
For Life option plus a Death Benefit giving your client the
option to preserve the capital, which is paid to the
beneficiaries on death of the Life Covered.

Max in Come Ref Guide Eng

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