Allocating receipts: GEPF captures and allocates receipts for payments to the debtor accounts daily; however to finalise this process for a specific month, the receipts must be captured and allocated by the 10th of the next month in preparation for reconciliation. The type of scheme. However, many employers prefer to match your contributions £1 for £1, known as 100% matching. A part of the reforms that have taken place in the Nigerian Pension Scheme is the introduction of voluntary contributions. 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 … The deferral amount will be amortized for 15 years for payments beginning 2012. Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. There are also a number of other situations where additional liabilities could arise, for which the employer must pay. These lump sums are a very valuable benefit and should never be overlooked when comparing schemes. As well as a pension based on your income and years of membership, some final salary pension schemes -- notably in the public sector -- provide lump sums linked to your length of service. Raising of late payment interest: Each month, GEPF calculates late payment interest based on the Repo rate+ 3%. Defined benefit schemes lift your pension payments each year, usually in line with inflation. Following up on discrepancies: Defaulting employers are issued with escalation letters as per GEPF’s Debt Collection Policy. London Today, the vast majority of these schemes have been shut down to new joiners. The amount you must contribute to the pension scheme is determined by the scheme’s rules. In the public sector it is around 20%. Corner Meintjies and Francis Baard Street In most cases, your employer pays the premiums for this insurance, so it's free to you. Reconciliation: One month in arrears, reconciliation is performed to reconcile payable instalment and amount allocated. Reconciliation: In the last week of the month, the GEPF does a financial reconciliation to check that there is a match between amounts received and amounts payable. Most private sector pensions have a normal retirement age of 65 for men and women. As well as contributing according to a "You pay X%, we pay Y%" formula, you can also make additional contributions to your workplace pension. The advantage of doing this is you get tax relief at your highest tax rate. If your employer offers a pension, they can decide to terminate it. The last part of the reconciliation process is to calculate the contributions outstanding for the month. Status reports are submitted to GEPF management. If you have a defined contribution pension - the most common type of pension nowadays - the value of your pension on retirement depends on how much you’ve paid into your pension, the performance of your investments, and the fees taken by your pension provider.. Deducting the instalments due: The runs takes place on the last weekend of the month. Your actual pension contribution is: £2,309 a year or £192.43 a month. The most common match is 50 cents on the dollar up to 6% of the employee's pay. Allocating receipts: The GEPF captures and allocates receipts for payments to the debtor accounts daily; however, to finalise this process for a specific month the receipts must be captured and allocated by the 10th of the next month to the relevant Purchase of Service suspense account, in preparation for reconciliation. Those working in the accommodation and food service industries don’t have much to cheer about either when it comes to their employers’ pension contributions. Should no response be received, the matter is followed up and then escalated in terms of GEPF’s Debt Collection Policy. In some cases, accrual rates are 1/80th, so working four decades would earn you a pension worth half of your salary. 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. These amounts are collected by their employer and are paid directly to GEPF. Allocating receipts: Any amount received in respect of the debt is allocated against that employer. 2009, c. 19 allows for a deferral of 50% on normal contributions and accrued liability. 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). By Kobus Hanekom, 24 March 2014. Alas, thanks to their sky-high running costs, these have all but died out in the private sector. However, this 'withering' of pension schemes has taken place almost exclusively in the private sector. Building 2A, Trevenna Campus Another valuable benefit provided by many corporate pension plans is life insurance, known as 'death in service' cover. EC1Y 8AE, LOVEMONEY.COM LIMITED IS A REGISTERED COMPANY IN ENGLAND & Wales. 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. When collecting additional liability claims from employers, the GEPF uses the following process: Raising the amounts payable by the employer and member: This is done every quarter, after the actuaries have calculated the amounts owing. What this means is that they don't pay a penny into their pensions, as their benefits are provided solely by contributions from their employer (usually the taxpayer). Persal or Persol deduction: On a monthly basis, the employer would deduct the Purchase of Service instalment against the member’s salary and pay it over to the GEPF. The President or Premier of a province is appointing a person whose service is not recognised as pensionable service; and/or. In theory, an employer can pay any amount of pension contribution to a registered pension scheme for their employees, regardless of their salary. They can submit salary schedules or create a salary output file/payroll interface which uses the same file layout as the Persal data set. Having reviewed defined benefit schemes, now let's look at their inferior alternative: defined contribution or money purchase schemes. 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. However, employees enrolled in pension plans may elect or be required to contribute to the plan. This calculator will show you how much will be paid into your pension by you and your employer. Following up on discrepancies: The reconciliation is performed to identify defaulting members. 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. On the other hand, more than nine in ten public sector employees get gold-plated pensions. If you do, you can choose, on or before 31 October, to have the tax relief for the contributions allowed in the earlier tax year. Manual contributors have different options for paying pension contributions over to GEPF. Allocating receipts:  The GEPF captures and allocates receipts for payment to the debtor accounts daily. A few lucky individuals -- including members of the Armed Forces -- are members of non-contributory pension schemes. 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. In some cases, this no-strings payment could be 10% or even 15% of your before-tax salary. This is because pensions are simply future pay, so not joining a good pension plan is like turning down a pay rise -- every year, for life. From April 6, 2019, the minimum employer contribution level increased to three percent. 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. In some cases, this no-strings payment could be 10% or even 15% of your before-tax salary. Your employer must contribute the minimum amount if you earn more than: £520 a month; £120 a week; £480 over 4 weeks However, to finalise this process for a specific month, the receipts must be captured and allocated by the 10th of the next month in preparation for reconciliation. Reconciliation: The amount deducted from the member’s debt as an instalment is set off against the amount deducted from the member’s salary as reflected on Persal and or Persol. So after 40 years, you'd get half your wage as a pension, plus 120/80ths as a lump sum, worth 1½ times your yearly salary. GEPF bases late payment interest on the Repo rate + 3%. Raising late payment interest: Once interest on late payments is calculated, letters are sent to the employers to inform them accordingly. 2011, c. 78, Pension Reform, reduces the rate from 11.72% to 11.14%. 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. What's more, as these policies are written 'in trust,' they are paid to a deceased employee's beneficiaries free of all taxes. For medical 4474 will always equal 3810 as the … In order to reduce the ongoing cost of running guaranteed pension schemes, many employers have switched from final salary to career average payouts. So a career lasting 40 years would get you 40/60ths (two-thirds) of your final salary as your starting pension. 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. Electronic interaction is possible when an employer uses the National Treasury’s transversal systems, Persal or Persol, to administer its salaries.   Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. COMPANY REG NO: 7406028 VAT NO: 945 6954 72. Therefore, paying an extra, say, 5% of your wage into a pension could cost you just 4%, 3% or even 2.5% of your pay, thanks to tax relief. If you’ve voluntarily enrolled in a workplace pension. (2) P.L. 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). Sunnyside, Pretoria, Tel: +27 80 011 7669 Following up on discrepancies: This step is aimed at correcting overpayments and underpayments. Some generous employers pay a flat percentage of your pay into your pension, even if you don't contribute a penny. A check is made to confirm that receipts have been correctly captured and that any employer refunds have been properly processed. Non-Payment of Pension Contributions Law a Significant Business Risk for Employers . On receipt of these, GEPF raises the employer debt and sends claim letters to the employers to recover the amounts due. GEPF Administration Office In other words, your pension isn't linked to the peak salary you earned in your final year, but is based on the average wage throughout your service. Copyright © lovemoney.com All rights reserved. It is now law that most employees must be enrolled into a workplace pension scheme by their employer. 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