You need to be signed in for this feature, 36 Featherstone Street All members of the Fund contribute at a rate of 7.5% of pensionable salary. The actuaries send GEPF the calculations, actuarial letters and a list of members. Sunnyside, Pretoria, Tel: +27 80 011 7669 Your actual pension contribution percentage is: 6.6% When adjustments have to be made, letters are sent to members.Reporting on the results: A monthly status– debts record, report is submitted to GEPF management. With a traditional pension plan, your employer is generally responsible for funding your pension. Otherwise, your lump sum from life insurance could be paid to an ex-spouse, for example! The problem is that tax relief isn’t automatic and it’s up to the employer’s local inspector of taxes whether or not the employer receives tax relief on the whole contribution. Non-Payment of Pension Contributions Law a Significant Business Risk for Employers . However, employees enrolled in pension plans may elect or be required to contribute to the plan. Employers in this sector typically contribute just 2.9% of the typical £29,451 salary into workers’ pensions, equivalent to £589 a year. This is submitted to GEPF management and the Board’s Benefits and Administration Committee. In the public sector, most schemes have a normal retirement age of 60 (55 for the Armed Forces), but the Government is pushing to raise this to 65 for most of its employees. The type of scheme. London For a higher rate (40%) taxpayer, a £100 contribution costs £60. EC1Y 8AE, LOVEMONEY.COM LIMITED IS A REGISTERED COMPANY IN ENGLAND & Wales. This has led to many organisations curbing or even closing altogether their pension schemes. This interaction can take place electronically or manually, depending on the salary administration system that each employer uses. In some cases, accrual rates are 1/80th, so working four decades would earn you a pension worth half of your salary. According to Section 17 of the Government Employees Pension Law (GEP Law), if an employer pays its employees enhanced pension benefits that constitute an additional liability to the Fund, the employer will be held liable for the extra costs. How big these pensions get depends on four things: Let's briefly look at the first two factors: Ideally, you want your employer to be as big-hearted as possible by footing most of the bill for providing you with a retirement income. Another valuable benefit provided by many corporate pension plans is life insurance, known as 'death in service' cover. Fax: +27 12 326 2507, Employers who are electronic contributors, Collecting Purchase of Service instalments, GEPF ANNUAL RESULTS AS AT FINANCIAL YEAR-END MARCH 2020, Africa’s largest pension fund appoints new Principal Executive Officer, GEPF Chairperson Refutes Holomisa Allegations, GEPF congratulates Abel Sithole on his appointment. Raising late payment interest: Once interest on late payments has been calculated, letters are sent to the employers to inform them accordingly. A contribution would not be allowable if there is an identifiable non-business purpose for the employer's decision to make the pension contribution or for the size of the contribution. These amounts are collected by their employer and are paid directly to GEPF. Reconciliation: One month in arrears, reconciliation is performed to reconcile payable instalment and amount allocated. The deferral amount will be amortized for 15 years for payments beginning 2012. In some cases, this no-strings payment could be 10% or even 15% of your before-tax salary. Even so, some generous employers still offer final salary pensions to new joiners, including Tesco and the John Lewis Partnership (owner of John Lewis and Waitrose). What's more, as these policies are written 'in trust,' they are paid to a deceased employee's beneficiaries free of all taxes. The current position is that contributions to a pension fund or a non-contributory provident fund, which an employer is required to make in terms of the rules of the applicable fund in respect of its employees, do not constitute a taxable benefit under the Seventh Schedule to the Income Tax Act 58 of … Electronic interaction is possible when an employer uses the National Treasury’s transversal systems, Persal or Persol, to administer its salaries. In order to reduce the ongoing cost of running guaranteed pension schemes, many employers have switched from final salary to career average payouts. If you put more than this into your pension, you won’t receive tax relief on any amount over the contribution limit. Final salary plans are the 'gold standard' of pension schemes. The employer currently contributes at a rate of 16% of pensionable salary in respect of “services” members and 13% in respect of “other” members, reflecting the differences in the benefit structure of these two categories of members. They pay pension contributions over to the Fund every month and notify the fund when new members are being admitted and existing members are withdrawing. Pension contributions Employer contributions to an approved occupational pension scheme (OPS) on behalf of employees are a not a benefit in kind in their hands. Contributions received are checked from the 8th day of the month to determine which contributions are outstanding for the calculation of interest on late payment. Discharge is in the interest of the employer. Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. If it is not, the GEPF follow up with National Treasury’s Transversal Systems. The joy of a final salary scheme is that the employer takes all of the investment risk and longevity risk (how long you'll live), while promising you a pension based on your years of service and salary on retirement. Your pension contribution will actually apply to: £28,864 of your salary. Non-contributory, final salary pension schemes are as rare as hen's teeth these days, so if you ever get the opportunity to join one, then do so without delay. In fact, after your basic salary (and bonus, if you get one), the most important factor to consider when weighing up a job offer is the pension you'll get. The information is available by the third week of every month for the month concerned.Information is also received from SARS and South African Social Security Agency (SASSA). For a basic rate taxpayer, a £100 pension contribution costs £80, thanks to 20% tax relief. TaxTim says: 22 March 2016 at 16:15 If you personally contribute to the pension fund then there should be a source code 4001 and 4472 (assuming the employer contributes as well) and you would need to ask the employer as to why there is no 4475 - if the employer is adding a fringe benefit and taxing you on it then they should show the 4475. Corner Meintjies and Francis Baard Street Status reports are submitted to GEPF management. In other words, for each complete year of membership, you earn another 1/60th of your wage as a pension. The GEPF has a clearly defined contribution management process for receiving, reconciling and reporting on manual payments. Each month, the employer deducts the Purchase of Service instalment against the member’s salary and pays it over to GEPF. In the public sector it is around 20%. Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. If you’ve voluntarily enrolled in a workplace pension. While most still link to the RPI (Retail Prices Index) measure of inflation, many schemes are switching to the lower CPI (Consumer Prices Index). The additional costs are referred to as an “additional liability” and will be claimed back from the employer by the GEPF. The most common match is 50 cents on the dollar up to 6% of the employee's pay. However, many employers prefer to match your contributions £1 for £1, known as 100% matching. Tax-deductible employee contributions to pension funds are permitted to the extent of 7,5% of taxable income. How much your employer pays in (the higher its yearly contributions, the better); How much you pay in (your yearly contributions); Your investment returns over time (the higher, the better); and. Some generous employers pay a flat percentage of your pay into your pension, even if you don't contribute a penny. In the case of electronic transactions, our contribution management process consists of the following steps: Raising the amounts payable by the employer and member: This information comes from the monthly salary information obtained from Persal and Persol. Following up on discrepancies: The reconciliation is performed to identify defaulting members. Tax-free employer contributions to pension funds are limited to 10% of employment income. Some of these employers also do not use a payroll interface or the Persal or Persol Transversal Systems, and instead use manual processes to interact with the GEPF. However, SARS applies a discretionary allowance to increase tax-deductible contribution rates of up to 20% of employment income. Some employers match dollar for … The information is captured on Excel spreadsheets. Far-reaching new legislation has been introduced which will make non-payment of retirement fund contributions by employers a criminal offence – and financial officers and directors can be held personally liable.