Retirement funds
Starting a retirement fund for employees - Pension Fund or Provident FundThe government is forcing employers to start pension funds, as it does not want people to take the full amount out at retirement. Instead it would like retirees to have a regular pension. We list the main factors influencing the choice between a pension and provident fund.
Pension FundThe objective of a pension fund is to provide employees with a regular pension in retirement. Pension fund members must buy an annuity with at least two-thirds of their retirement fund.
Provident FundThe objective of a provident fund is to provide employees with a lump sum benefit at retirement. A provident fund is thus more flexible, as employees can still purchase an annuity with their fund.
From 1 March 2016, the maximum permissible tax free deductible contributions to pension and provident funds have been standardised. Employers can deduct unlimited contributions to their employees’ pension or provident fund. These contributions attract fringe benefits tax that must be recovered from the employee. The employee can, in turn, deduct all contributions (employer and employee contributions) up at 27.5% of gross remuneration or taxable income (whichever is the higher), subject to an annual cap of R350,000. Our Retirement fund consulting servicesWe offer the following retirement fund consulting services:
- Independent research and advice - Comparative quotes - Arrange presentations by providers - Implement retirement fund solution. This consists of group presentations, as well as individual face to face financial planning sessions. - Ongoing advice and service. This includes: Dedicated internal consultant New services and products Member admin and claim queries Annual member benefit statements Annual members’ presentation Voluntary individual member financial planning reviews Review of product providers as necessary. Our product providersWe make use of the following reputable companies in sourcing quotes and constructing solutions for our clients:
Allan Gray Discovery Fedgroup GQM Liberty Corporate Momentum Funds At Work Old Mutual Corporate Sanlam Employee Benefits: Sanlam produces an annual, industry-leading research paper on the retirement fund industry, you may find it here: https://www.sanlam.co.za/institutional/retirement/benchmarksurvey/Pages/default.aspx/ Sygnia |
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Further reading: Retirement funds - Your rights