Umbrella Funds

An employer has two options when it comes to providing employees with retirement and other benefits. They can set up a stand-alone (also known as a privately administered) retirement fund, or they can choose to participate in an umbrella fund.



Umbrella fund regulatory updates

National Treasury’s paper on Governance on Umbrella Funds (14 December 2021)



Notice Board

Meet Jolly Mokorosi, the newly appointed Chairman of Sanlam’s Umbrella Fund. Jolly shares her views on how members’ needs are changing and how this shapes her vision for the fund going forward.

Why Join an Umbrella Fund?

The two biggest advantages of belonging to an umbrella fund are:



To hand over the fiduciary responsibilities of running a retirement fund to a professional board, and



The cost savings of standardising many of the benefits and options, and the economies of scale that are achieved by splitting the “fixed costs” (like audit fees) across a larger group of members.

Stand alone Funds and Umbrella Funds.

What are the differences between a standalone fund and an umbrella fund?

Stand Alone Funds

Umbrella Funds

The employer

Sponsor

The commercial administrator

50% appointed by the employer
50% elected by fund members

Board of trustees

Appointed by the sponsor
May include independent/professional trustees

Appointed by the board of trustees

Service providers

Appointed by the board of trustees

Full flexibility – within legislated constraints

Benefit options

Usually a menu of standard options available to participating employers/sub-funds

Full flexibility – within Reg 28 limits

Investment flexibility

Full flexibility – within Reg 28 limits Investment flexibility Usually a limited number of investment managers and portfolios available to participating employers/sub-funds

Questions to ask Your Provider.

Questions to ask your provider when considering an umbrella fund.

Click for Questions

Stand alone Funds and Umbrella Funds.

What are the differences between a standalone fund and an umbrella fund?

Stand Alone Funds

Sponsor:
The employer

Board of trustees:
50% appointed by the employer
50% elected by fund members

Service providers:
Appointed by the board of trustees

Benefit options:
Full flexibility – within legislated constraints

Investment flexibility:
Full flexibility – within Reg 28 limits

Umbrella Funds

Sponsor:
The commercial administrator

Board of trustees:
Appointed by the sponsor
May include independent/professional trustees

Service providers:
Appointed by the board of trustees

Benefit options:
Usually a menu of standard options available to participating employers/sub-funds

Investment flexibility:
Full flexibility – within Reg 28 limits Investment flexibility Usually a limited number of investment managers and portfolios available to participating employers/sub-funds