Pension Advice South Africa
Many of the bigger corporate institutions in South Africa have employee benefits in place that will very likely include retirement funds. This will usually form part of your total package. There are currently three basic retirement fund structures in South Africa, namely a Pension Fund, Provident Fund and a Retirement Annuity.
Pension Fund
This is a company funded retirement scheme which is based on a defined contribution basis of which the employee will pay a portion and the company a portion on behalf of the employee. The portion paid by the employee is basically tax deductible up to 7.5% of what is known as retirement funding income, which is the percentage of your salary that is allocated as calculating your pension fund contribution. This is for the most part between 60 – 100% of your salary.
The Pension Fund will have its own rules, which vary from company to company. The important consideration to make is that the fund rules will have a retirement age, at which age you will have access to the accumulated pension funds, with certain limits on the method of access.
Evidently it is clear that if you are merely in the country on a temporary work permit you need to consider looking at the details of what has been explained briefly above as you should potentially be looking at other options instead of a Pension Fund as it will limit what you are able to do with the accumulated investment value.
Provident Fund
This type of fund serves the same purpose as a pension fund but is quite different in that you are not able to deduct any contributions from your taxable income and there are no limitations as to the age that you have to be to be able to withdraw your accumulated investment value. There are no other limitations on how you may withdraw, except for the tax that you will need to pay on the withdrawal.
This type of vehicle is quite a bit more flexible and therefore potentially appropriate for an employee that is in South Africa on a temporary basis. However, there are still potentially some better and more appropriate options that will attract less tax on withdrawal. Again it will be prudent to consider these options before agreeing on a package with your employer.
Retirement Annuity
This type of investment is basically the same in structure as a pension fund except that it is a personal pension and has nothing to do with your employer. South Africans use this type of vehicle as additional retirement savings or as retirement savings if their employers do not provide retirement benefits. There are also tax breaks yearly for your retirement annuity contributions, but it is quite evident that such an investment will not be suitable for and employee in South Africa on a temporary basis.
To find out how Intergate Corporate can assist your organization please contact us for a free initial consultation or request a call back.
|
