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When saving money for retirement, it is important to earn as much interest or returns as possible.  Therefore, your money in the UCTRF has to be invested in the portfolio that best suits your needs. 

The UCTRF Board try to ensure that they cater for the needs and requirements of the bulk of the members.  One of the ways in which they do this, is to provide members with a range of investment portfolios. 

The Board has designed four main investment channels to deal with the different needs of members with respect to their Inflation Risk and Final Payment Risk.

However, one Portfolio, the Smoothed Bonus Portfolio, has been closed to any members who do not already have investments in this portfolio on 30 June 2020.

Life Stage Model - Default Choice

Not all of us are investment experts.  The Board acknowledges this fact and has therefore provided members with an investment model where their Accumulated Retirement Savings will be moved to less volatile portfolios as they near Normal Retirement Date. This is due to the accepted practice that younger members should be invested in a portfolio with the highest possible potential returns over the long term, but should then be migrated to less volatile portfolios as they age to ensure they do not suffer large capital losses (final payment risk) should the markets crash just before their retirement.

All members will transition as shown in the table below:

AGE* 

Strategy for the balance already accumulated in the UCTRF 

Future Contributions strategy 

59 years or less

Balanced Portfolio

Balanced Portfolio

60 years

Your accumulated balance will be restructured as shown in the right-hand column

85% Balanced 
15% Capital Preservation

61 years

Your accumulated balance will be restructured as shown in the right-hand column

70% Balanced  
30% Capital Preservation

62 years

Your accumulated balance will be restructured as shown in the right-hand column

55% Balanced  
45% Capital Preservation

63 years

Your accumulated balance will be restructured as shown in the right-hand column

40% Balanced  
60% Capital Preservation

64 years

Your accumulated balance will be restructured as shown in the right-hand column

25% Balanced  
75% Capital Preservation

* The transitions indicated in the above table occur on 1 January of the year in which you turn the relevant age.

Please note: This model is suitable for retirement at age 65. If you don’t exercise a choice when joining the UCTRF, your retirement saving contributions will automatically be defaulted so that it is invested in accordance with the Life Stage Model as described above.

Member Investment Choice Model

Members can choose what percentage of their Accumulated Retirement Savings should be invested in the four* portfolios on offer: the Capital Preservation Portfolio, Smoothed Bonus Portfolio*, Balanced Portfolio, and Shari'ah Balanced Portfolio.  This model is suitable for members who are comfortable with investment concepts, making their own investment decisions and/or members who have planned to retire from the UCTRF earlier or later than age 65.
  • *The Smoothed Bonus Portfolio has been closed to any members who do not already have investments in this Portfolio on 30 June 2020.


For more information regarding the costs and fees associated with your investments, please click here.



Let’s take a look at each of these portfolios on offer.



The Capital Preservation Portfolio is invested in money-market instruments. The prime objective of this portfolio is to preserve the Rand value of your Accumulated Retirement Savings at all times and to increase it with the interest earned on the underlying money-market instruments.

If you turn 60 or older in the year that you join the UCTRF, and you don’t exercise a choice when joining the UCTRF, your retirement saving contributions will automatically be defaulted so that 100% is invested in the Capital Preservation Portfolio.

Suitable for:
Members wanting protection against Final Payment Risk, i.e. a member that may withdraw or retire from the UCTRF in the next 2 years. 

Risk:
This portfolio gives limited protection against Inflation Risk since it includes bonds (maximum term 3 years).  The capital value of a bond may decline in periods of rising interest rates.

Objective:
Returns of 1% above CPI (inflation).

 

NB: This portfolio has been closed to any members who do not already have investments in this Portfolio on 30 June 2020.

The two main features of this portfolio are:

  • It "smooths” the investment return earned on the underlying assets; and
  • It provides a guarantee of contributions made.

This portfolio has been designed in such a way that it targets (but does not guarantee) a net long-term investment return of some 3% per annum above inflation.

Suitable for:
Members within 3 – 5 years of exiting the UCTRF.

Risk:
As the portfolio has some investments in the markets, its Inflation Risk is lower than that of the Capital Preservation Portfolio. It also guarantees your contributions, which decreases Final Payment Risk.

Objective:
Returns of 3% above CPI (inflation).





The Balanced Portfolio is expected to give the highest return of the 4 channels offered by the UCTRF over the long term. Its asset allocation is similar to that of the Smoothed Bonus Portfolio, but it does not provide any guarantee – you are simply credited with the net return earned on the underlying assets.

Suitable for:
Members with 6 years or more before exiting the UCTRF

Risk:
The portfolio is invested in the markets and has the highest potential for good returns over the longer term, therefore has very little Inflation Risk.

Objective:

Returns of 5% above CPI (inflation).



 

The Shari’ah Portfolio has been set up to comply with Islamic law or Shari’ah, and has an asset allocation that is somewhat more conservative than that of the Balanced Portfolio.

The managers have a mandate to adhere to the following key Shari'ah principles:

  • The ban on interest: interest must not be charged or paid on any financial transaction, as interest is deemed unlawful by Shari'ah.
  • The ban on financing certain economic sectors: companies involved in the following activities are not Shari'ah compliant –

    o Conventional financial services 
    o Alcohol and tobacco 
    o Non-Halaal food production or processing activities 
    o Entertainment (casinos, gambling and pornography) 
    o Weapons and arms manufacturing

    It is expected to give a return that is lower than the Balanced Portfolio over the long term due to the lower possible allocation to equities.

Suitable for:
Members who wish to comply with Islamic law in this way.

Risk:
Deals mainly with Inflation Risk but is somewhat more conservative than the Balanced Portfolio and is managed according to Shari'ah investment principles.

Objective:

Returns of 4% above CPI (inflation).








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