The Funds are Defined Contribution Funds, in other words, the end benefit to the member is determined by the contributions made to the Funds and the investment returns earned on these contributions. If the investments appreciate, the value of the benefit increases. If the investments depreciate, the value of the benefit decreases. This means that members carry the investment risk. The objective of the Funds is to enable members to receive a benefit (Fund Credit) when they retire.

The total contributions contributed to the Funds represents 16% of the member’s pensionable salary. The pensionable salary could be different to the members actual cost to company in order to make this more affordable. Of this 16%, 12% goes towards the members retirement benefit, 3% is used to pay for death benefits, funeral benefits and disability benefits, while the remaining 1% is used to meet the cost of all of the Funds expenses. The provision of Risk Benefits is subject to affordability and is therefore subject to change.

The member’s Fund Credit is the sum of all the contributions allocated to their retirement benefit, increased or decreased by investment return. The amount of investment return that is received will depend on the amount earned by the Funds’ investments, which are managed by Asset Managers appointed by the Board of Trustees.

All benefits which become payable may be subject to tax and may, therefore, be reduced by an amount of money to be paid to the South African Revenue Services (SARS). In addition, if the member owes SARS any other taxes, those taxes will be deducted from any benefits.

Retirement Age

The Normal Retirement Age is 60, but members may retire any time after reaching age 55. The later they retire, the higher their retirement benefit will be.

Pension Benefit at Retirement

The retirement fund legislation has changed effective from 1 March 2021 in order to harmonise the treatment of all types of retirement funds being. Pension, Provident and Retirement Annuity Funds. In other words, members of Provident Funds will now have to use 2/3rds of their fund credit retirement benefit to purchase an annuity. Their monthly pension can be purchased from any Registered Insurer and must be purchased in their own name. On retirement, their membership will cease.

If a contributing member passes away prior to age 65, their beneficiary(s) will be paid a death benefit of 5 times their annual pensionable salary. For example, if their monthly pensionable salary is R5,000, the death benefit will be R300,000 (R5,000 x 12 months x 5).

Contributing Employees aged between 65 and 70 qualify for a R100,000 death benefit.

Payment of the death benefit is subject to one contribution having been made within the two months prior to date of death. If death occurs within the first three months of membership, unless death is as a result of an accident, the death benefit shall not be paid.

Fund Credit

Beneficiary(s) will also be paid the member’s Fund Credit.

As a contributing member prior to age 65, members and their immediate family will be covered for funeral benefits. The Fund provides the following funeral benefits:

• Member, member spouse, or children aged 14 to 21 years: R60,000.00
• Children aged 6 to 13 years: R33,750.00
• Children aged 1 to 5 years: R20,000.00
• Children aged 0 to 11 months: R16,500.00
• Children if stillborn: R13,500.00

NOTE: An unmarried child is covered up to the age of 21 years and up to the age of 25 years if a full-time student. Members must, at claim stage, be able to provide proof from a recognised educational institution that the child was a full-time student at date of death. Payment of the funeral benefit is subject to the member being a current contributor at the date of death.

If, as a contributing member prior to age 65, and based on the medical evidence submitted, the Insurer of this benefit considers a member to be totally disabled from performing their occupation, the member will receive the following benefit after a period of three (3) months from the date of their disablement:

A disability benefit of 75% of the member’s average pensionable salary during the period of 12 months preceding their disablement will be paid. For example, if the member’s average monthly pensionable salary is R5,000 the benefit will be R3,750 per month. This benefit will be paid for 21 months and will commence after the 3-month waiting period has expired.

After the 21 months payment period, and if the disability is considered to be permanent and total, a lump sum benefit of 5 times the member’s annual pensionable salary will be paid, and membership will cease. The member will also receive their Fund Credit.

Details of injuries and illnesses that are not covered for the above insured benefit are given in the Rules of the Disability Benefit Scheme.
Payment of the disability benefit is subject to one contribution having been made within the two months prior to date of disability.

If a member is either retrenched, dismissed or resigns, they may claim their Vested Fund Credit and Savings Pot balance on the date of leaving employment.

The Funds has been established as privately administered Funds, controlled by their respective Boards of Management. The Boards are made up of representatives of the employees and the employers.

Alexander Forbes Financial Services provide consulting and actuarial services for the Fund.

The Funds are governed by a set of Rules that have been registered with the Registrar of Pension Funds.