Employee Benefit

Provident & Pension Fund: A pension fund is a retirement savings vehicle that is registered under the Pension Funds Act and approved for tax purposes by the South African Revenue Service (SARS). Member and employer contributions up to certain limits (employer up to 20% and employee up to 7.5%) are tax deductible and a maximum of one-third of the lump sum at retirement may be taken in cash while the remaining must be used to buy an annuity which will provide the member with a pension. A provident fund is a retirement savings vehicle that is also registered under the Pension Funds Act and approved for tax purposes by SARS. Employer contributions up to certain limits are tax deductible. Members receive no tax relief on the contributions that they pay. The full benefit at retirement can be taken in cash.

Group retirement annuities

Where an employer has a small number of employees, they often consider a group RA as an alternative to provide employees with some sort of retirement benefits. It is in fact a group of individual retirement annuities (each employee has their own retirement annuity policy) that are generally funded by one debit order against the employer’s bank account. The ‘scheme’ is administered by way of a schedule that is updated monthly by the employer and that is used by the insurer to allocate the correct premium amounts to the right policies. At the end of the tax year the insurer issues a contribution certificate to the individual member, (the employee), as proof of contributions made to the CRA.