Retirement Benefits
The benefit payable upon retirement from the Funds will be in the form of an annuity. Members retiring from the Fund may however elect to receive 100% of their benefit as a lump sum. The Trustees of the Funds have at this stage decided to only allow annuities to be purchased outside of the Funds.
The Annuity Strategy adopted by the Trustees of the Funds is as follows:
- The retiree must commute the maximum available tax-free allowance stipulated in the ruling Income Tax Act provisions.
- The balance of the retirement benefit must be transferred from the Fund to a guaranteed annuity purchased from a large reputable insurer, such as Sanlam, Old Mutual or Discovery.
- The guaranteed annuity must be structured as follows:
- The annuity must escalate annually on its anniversary date at a rate equal to the increase in CPI for the 12 months immediately preceding the anniversary date.
- The escalated annuity amount must be paid until death of the retiree but guaranteed for at least 5 years.
- On death of the retiree, or on expiry of the guaranteed 5 years period if later, a reduced annuity with annual escalations must be paid until death of the surviving spouse who was married to the retiree on date of retirement. The reduced annuity must be 70% of the annuity being paid immediately prior to the retiree’s death or at the end of the 5 years guarantee period if later.
- Fees must be fully disclosed.
- Purchasing the annuity is the Member’s own responsibility.
Members will be given access to Retirement Benefits Counseling 6 months prior to reaching their Normal Retirement Age.
Normal Retirement - On retirement members will receive their Fund Credit as at the date of retirement. The whole or any portion of the retirement benefit may be paid out for a lump sum benefit, or a member may purchase a pension from a registered insurer.
Early Retirement - Members may, with the consent of their employer, retire any time after attaining age 55 years, except for reasons of ill-health in which case members may retire at any time prior to the normal retirement date. At early retirement date, members will be paid a benefit as described for Normal Retirement, but based on Fund Credit at the actual date of retirement.
Late Retirement - Members may, with the consent of their employer, remain in service and a member of the Fund, after attaining age 65 years, and retire at a date later as agreed with their employer. However, in such instances, members no longer participate in the Fund’s risk benefits, and will be paid a benefit as described for Normal Retirement, but based on Fund Credit at actual date of retirement, or such date in the event of death.
Death and Disability Benefits
Death Benefit - Upon the death of a member, a lump sum benefit equal to 2 x annual pensionable salary or wage, together with his/her Fund Credit, is payable to the member’s beneficiaries. This amount will be reduced by any deductions in respect of tax, outstanding housing loans and any other deductions allowed in terms of the Pension Funds Act. The benefit will be paid to the member’s dependents and nominees.
Permanent Disability – Should a member, in the opinion of the Trustees, become permanently incapable of following his/her own occupation or a similar occupation, the member will be entitled, after a waiting period of six months, to a lump sum disability benefit equal to 2 x annual salary or wage, together with his/her Fund Credit. Once a member has received a disability benefit, their membership in the Fund will cease and he/she will not be entitled to any further benefits from the Fund (i.e. a death or retirement benefit).
Temporary Disability - Should a member, in the opinion of the insurer, become temporarily incapable of following his own occupation, he / she will be entitled, after a waiting period of one month, to a monthly benefit equal to 50% of his / her monthly wage for a period of 5 months after the waiting period. A member in receipt of this benefit will remain a member of the Fund during the period that these premiums are paid and will remain covered for all other benefits.
Withdrawal Benefits
Members of the Fund that leave the employ of their employer will become a paid-up member in the Funds until the Funds receive written instructions from the Member to make a cash payment or to transfer to another approved fund. The Paid-Up Member’s Fund Credit will remain in the investment portfolio that he / she was invested in immediately prior to the termination of service with his / her employer. Paid-Up Members will receive a Paid-Up Membership Certificate within 2 calendar months of becoming a Paid-Up Member.
The following conditions will apply to all Paid-Up Members:
- No new contributions will be accepted;
- Cover for all approved and ancillary unapproved benefits will cease;
- No deductions will be made from the Paid-Up Member’s Fund Credit for risk benefits;
- The same administration fees, operational costs and investment administration fees that applied prior to the Member becoming a Paid-Up Member shall continue to apply to the Paid-Up Member;
- The Paid-Up Member’s Fund Credit will remain in the investment portfolio that he / she was invested in immediately prior to the termination of service with his / her employer.
- In the event of death, retirement and early retirement, only the Member’s Fund Credit will be payable; and
- Members will be given access to retirement benefits counselling before any withdrawal benefit is paid or any transfer is made to another fund. (Please refer to the section entitled Retirement Benefits Counselling that follows)
Resignation - If a member leaves the service of their employer before normal retirement age for any reason other than retirement, ill-health, death or disability, the member will be entitled to the full value of the Fund Credit after a three-month waiting period.
Retrenchment - If a member leaves the service of their employer before normal retirement age as a result of retrenchment, the member will be entitled to the full value of Fund Credit as soon as possible after such an event.
It is important to understand the options available and in this regard, it is advisable to obtain professional advice before making any decisions.
For more detailed information on the benefits provided by the Fund, please view the member booklet: