|
|
1. Cash Deposits |
100% |
|
(a) Inside the Republic |
100%
|
|
Deposits with banks, building societies, the post office, etc |
|
|
(i) Per bank |
20% |
|
(ii) Per mutual building society |
20% |
|
(iii) Post office savings bank |
20% |
|
(iv) SAFEX
|
5%
|
|
(v) Outside the Republic |
15% |
|
2. Kruger Rands
|
10%
|
|
3. Bills, bonds and securities
|
100% |
(a) Inside the Republic – Stock with local authorities, Development boards, Rand
Water Board, Eskom,
Land Bank and Local Authorities Loans Fund Board, per institution.
|
20% |
|
(b) Outside the Republic |
15% |
|
4. Bills, bonds and securities approved in terms of |
|
|
Section 19(1)(h) |
100%
|
|
Per institution
|
20% |
|
5. Bills, bonds and securities approved in terms of |
|
|
Section 19(1)(i) |
100% |
|
Per Authority
|
20% |
|
6. Immovable property
|
25% |
|
(a) Inside the Republic
|
25%
|
|
Any single property / project
|
5%
|
|
(b) Outside the Republic
|
10%
|
|
Any single property/project
|
5% |
|
7. Equities
|
75% |
|
(a) Inside the Republic
|
75%
|
|
Unlisted
|
5%
|
|
Listed with market capitalization of R2 000 million or less |
10%
|
|
With a market capitalization greater than R2 000 million
|
15% |
|
(b) Outside the Republic
|
15%
|
|
Unlisted shares
|
2.5%
|
|
Listed with market capitalization of R2 000 million or less
|
10%
|
|
Listed with market capitalization of greater than R2 000 million
|
15% |
|
8. Secured claims, debentures
|
25% |
|
(a) Inside the Republic
|
25%
|
|
Claims against any one individual
|
0.25% |
|
Claims against any single company |
5% |
|
(b) Outside the Republic |
15%
|
|
Claims against any one individual
|
0.25%
|
|
Claims against any single company
|
5% |
|
9. Any other asst not referred to in this annexure
|
2.5% |
|
excluding -
|
|
|
(a) Money in hand |
|
|
(b) Housing loans |
|
|
(c) Investments in the business of a participating employer
|
|
|
(d) Bills, bonds or securities
|
|
|
Government of provincial administration
|
|
|
(e) Units in a unit trust scheme invested in cash and gifts |
|
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Membership (Provident and Pension)
Members of the pension and provident fund must be employees of the participating
business and must fall into a specific category of employees.
Membership of more than one fund is permissible, provided that the employee qualifies
in terms of the eligibility conditions of both funds.
Fund Income of Pension and Provident Funds
In terms of the Income Tax Act all income received by an approved pension / provident
fund is exempt from tax.
Retirement Income
"Retirement funding income" is the remuneration taken into account to determine
a member's and / or the employer's contribution to a pension or provident fund.
Contributions: Employer
All contributions by the employer to a pension, provident and benefit fund up to
10% of the employee's approved remuneration are allowed as a deduction from the
income of the employer. In practice the Commissioner of Inland Revenue allows up
to 20% aggregated for pension, provident and benefit funds.
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Contributions: Employees
Pension
An employee can deduct his actual contributions to an approved pension scheme during
the year of assessment up to a maximum of the greater of:
7.5% of his/her retirement funding income
Or
R1 750.
Provident Fund
Although an employee may contribute to the fund these contributions are not deductible.
Provident funds are normally on a non-contributory basis.
The Board of Trustee
The Board of Trustee is appointed in terms of a fund's rules or trust deed to manage
the affairs of the fund. The Trustees are required to do this in such a way as to
fulfill the goals or objectives of the fund and avoid at all times any conflict
of interest.
Every fund shall have a board consisting of at least four board members, at least
50% of whom the members of the fund shall have the right to elect. If member does
not exercise their right to elect 50% of the members on the board, the employer
will in practice be entitled to appoint all the members on the board of management.
The duties and responsibilities of the trustees are governed by statutory law, common
law and the documents of the fund.
- The trustee must act with care and utmost good faith.
- Trustees have a duty to know the specific rules in detail, the relevant legislation
contained in the Pension Funds Act and the Financial Institutions Act.
- The trustee's must also know the Trust Deed and other policy documents.
- The trustees have a duty to administer the fund in a manner prescribed by the rules
of the fund and common law relating to trusts.
- Ensure that the rules and operations and administration of the fund comply with
the act, the Financial Institutions Act
- Obtain expert advise on matters where the board members lack sufficient experience
- The object of the board shall be to divert, control and oversee the operations of
a fund in accordance with the applicable laws and the rules of the fund.
- Avoid conflict of interest
- Act with impartiality in respect of all members and beneficiaries
- Ensure proper registers, books and records of the operations of the fund are kept.
- Ensure proper controls and systems are employed
-
The trustees have a joint responsibility i.e. for the decisions and are therefore
unable to avoid individual liability. There are criminal and civil consequences
of failing to act in a proper manner.
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The Actuarial Valuation
Actuarial valuation is a complicated affair, generally applicable to Defined Benefit
Funds, which take many factors into account including age, gender, period of employment,
expected length of retirement, income, interest rates and inflation. During a valuation
the fund's actuary calculates the fair value of the funds assets and its liabilities.
The difference between these values is called the funds surplus.
The Surplus
Defined-benefit pension and provident funds can have what is called a surplus. The
surplus is the excess of assets in the fund in relation to a fund's liabilities.
A fund's liabilities are the current value of all amounts that will be paid to members
in the future in respect of retirements, withdrawals, deaths, pension payments etc.
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Umbrella Funds
Umbrella funds evolved in response to a need from smaller employers for cost effective
retirement fund solutions. They are normal pension and provident funds in which
multiple, unassociated employers participate, often offering a range of benefits
on a packaged basis.
There are two types of umbrella funds in the industry. The first type of umbrella
fund has one set of rules which sets out all the terms and conditions applicable
to all the employers and which bind all employers equally. The second type of umbrella
fund has a set of general rules which sets out the main governing provisions relating
to the fund. Each participating employer then has a set of special rules which set
out the specific condition and benefit conditions applicable to their employees.
Umbrella funds are normally established by a service provider who appoints the initial
trustees who are normally employees of the sponsor. The sponsor company is usually
the appointed administrator and consultants to the scheme.
There is one board of trustees which manages the fund. This board is normally exempt
from the PFA section 7A requirement to have a board consisting of at least 50% member
elected trustees. Some funds have appointed one or more independent trustees to
the board. A practice has developed to introduce a second level of management through
a management committee. The management committee would look after the interests
of the members relating to a particular participating employer. The main trustee
body delegates some of its functions to the management committee.
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