5.3 Provident Funds
Provident funds are similar to pension funds in that they provide for savings to be made towards retirement. However, before March 2019 at retirement, the member can take the entire benefit as a cash lump sum (after tax, if any has been deducted). Many funds allow the member to buy an annuity, if preferred, but […]
5.2 Pension Funds
Pension funds are designed to provide the retired member with a pension income during retirement, also known as an annuity. A maximum of one-third of the retirement benefit may be taken as a lump sum and a portion of such a lump sum may be tax-free. Compulsory annuitization applies to fund balances above R247 500. The […]
5.1 Introduction
In this module, only group employer-sponsored retirement funds are considered. Employer sponsored retirement funds means that the employer contributes to the retirement fund. In some funds both the employer and the member contribute (by way of a deduction from the member’s salary). This is known as contributory funds. In non-contributory funds, only the employer contributes […]
4.13 Dependent
A dependent is clearly defined in the Pension Funds Act. Dependent in relation to a member means one of the following: A person in respect of whom the member is legally liable for maintenance, for example, children from a current or past relationship, or where the member was paying maintenance towards an ex-spouse in terms […]
4.12 Retirement Benefits Counselling
The default regulations issued in terms of the Pension Funds Act defines retirement benefits counselling as the disclosure and explanation, in a clear and understandable language, including risks, costs and charges of the available investment portfolios, the fund’s annuity strategy and any other options made available to members. Regulation 39 states that members must be […]
4.11 Employer Surplus Account
Surplus in relation to a defined-contribution fund means the assets in excess of the total sum of the individual shares of the members. This surplus could have arisen from one of the following: Members leaving the fund with a benefit less than their full share of the fund. Any additional or ad-hoc contributions made by the employer. In […]
4.10 Deferred Retirement Benefit
The deferred retirement benefit allows retired members to continue their membership even though they have retired from their employer. This means that the member is no longer forced to retire from the fund when they still have other sources of income and do not need the retirement benefit yet.
4.9 Minimum Pension Increases
The Pension Funds Act also prescribes minimum pension increases where pensions are being paid from a pension fund, in other words, the lesser of a full inflation adjustment and the increase that the fund can afford. In addition, trustees must set and communicate a policy concerning a target pension increase and must aim to pay […]
4.8 Minimum Individual Reserves
The minimum benefit is the member’s minimum individual reserve. In the case of a defined-benefit fund, the minimum individual reserve is the full actuarial value, and in the case of a defined-contribution fund, it is the member’s share of the fund.
4.7 Normal Retirement Age
It has historically commonly been pitched at age 65, although some occupations, such as airline pilots, are not generally allowed to fly a commercial aircraft beyond 55. There is a general groundswell of opinion that, in the interests of the skills shortage and, more importantly, the fact that many people reach age 65 with insufficient […]