A Provident Fund is set up by an employer for the benefit of its employees and governed by the Pension Funds Act. The object of Provident Funds is to provide annuities (pensions) for the members upon retirement.
Alternatively, members can elect to receive the whole benefit at retirement as a cash lump sum or the members may elect a combination of an annuity and lump sum benefit. Should a member die prior to reaching retirement age, the accumulated value of their retirement savings will be distributed to the member’s dependants and/or nominees by the fund’s trustees.
A Pension Fund is set up by an employer for the benefit of its employees and governed by the Pension Funds Act. The object of this fund is to provide annuities (pensions) for the members upon retirement. The members may elect to take a portion up to a maximum of one third of their retirement benefit as a cash lump sum.
If a portion of the benefit was taken as a lump sum, the balance of the benefit must be used to buy an annuity.
Alternatively, the member may use his/her whole benefit to buy an annuity. Should a member die prior to reaching retirement age, the accumulated value of their savings in the pension fund will be distributed to the member’s dependants and/or nominees by the fund’s trustees.
Retirement Annuities allows you to invest regular premiums to build capital for your employees’ retirement, providing a base for their retirement capital, with this investment, you and your employees can take advantage of the generous tax concessions available to retirement funds in South Africa.
The Retirement Annuity Builder provides a base for retirement capital. At retirement, up to one-third of the proceeds of the investment in a retirement annuity may be taken out as a lump sum, while the balance must be used to purchase an income-generating annuity. Tax Benefit: Contributions to a retirement annuity are tax deductible up to certain limits. You can invest a percentage of your non-retirement funding income into a retirement annuity and receive a tax concession against this amount. You also do not pay any tax on the growth in this investment.