BENEFITS SUMMARY AND FUND AT A GLANCE
Eligibility Provisions: All employees within the Local Authority and Water Sector environment who are under age 65 may enjoy membership benefits.
Employee Contribution Rate: 7,50% of pensionable salary is contributed by the member. All contributions are applied towards the accumulation of retirement benefits.
Employer Contribution Rate: 17,5%, 18% or 22% of pensionable salary is contributed by the employer. This contribution contributes to the member’s retirement, death, disability and funeral benefits as well as Fund expenses.
Normal Retirement Age: Age 65 (early retirement is allowed from age 55)
In terms of the new Two-Pot system legislation that came into effect on 1 September 2024, members’ net retirement contributions are now split. Two-thirds of their retirement contributions are now transferred to their Retirement component and one-third is transferred to their Savings component.
RETIREMENT BENEFIT
When a member retires, the member will receive his or her Fund Credit*. The member may:
• Elect to take any Vested portion in cash;
• Purchase an annuity based on the Fund’s annuity strategy;
• Purchase an annuity of his/her choice;
• Transfer his/her retirement benefit to a Preservation Fund or a Retirement Annuity Fund;
• Defer retirement from the Fund.
WITHDRAWAL BENEFIT
When leaving the Fund (resignation, dismissal, or retrenchment), a member may:
Become a Paid-Up Member:
Keep his/her full benefit in the Fund; (subject to a monthly administration and expense fee)
No further contributions required;
May access the benefit later or transfer it.
Transfer his/her Benefit to another approved fund:
• Pension Fund;
• Provident Fund;
• Preservation Fund;
• Retirement Annuity Fund.
Take cash (where permitted as per legislation):
• Withdraw Savings and/or Vested components in full or part;
• Retirement component must remain in the Fund or be transferred;
• If a member withdraws only part of their Vested component, the rest must be transferred.
Important Rules: All three components (Savings, Vested, Retirement) must be:
• Transferred to the same fund, or
• Transferred proportionately to multiple approved funds.
Once any portion is paid out or transferred, no further claims can be made on that portion.
DEATH OF A MEMBER BEFORE RETIREMENT
The following benefit would become payable to the identified beneficiaries:
Death due to any cause (natural causes):
• Three times annual pensionable salary;
• Funeral benefit;
• Member’s Fund Credit*;
• Paid-up family funeral benefit**.
Death due to an accident (unnatural causes):
• Six times annual pensionable salary;
• Funeral benefit;
• Member’s Fund Credit*;
• Paid-up family funeral benefit**.
PERMANENT DISABILITY OF A MEMBER BEFORE RETIREMENT
The following benefit would become payable:
Permanent disability due to any cause (natural causes)
• Up to three times annual pensionable salary (an insured disability benefit);
• Member’s Fund Credit*;
• Paid-up family funeral benefit**
Permanent disability due to an accident
• Up to six times annual pensionable salary (an insured disability benefit);
• Member’s Fund Credit*;
• Paid-up family funeral benefit**
The Disability Benefit expires at age 65 years. The insured three times annual pensionable salary portion is subject to a five-year tapering period. This means that the benefit reduces by 20% for each year that passes from the time a member turns 60 years. This benefit will cease or will be zero at the normal retirement age of 65 years.
The total disability benefit is paid out as a retirement benefit as described in Item 1.
FAMILY FUNERAL BENEFITS
Member and spouse …………………………….R50 000
Children aged 14 to 21.………………………….R50 000
Children aged 6 to13…………………………………. R25 000
Children younger than 6 (including stillborn) …R10 000
NOTE: The funeral benefit payable in the event of the death of a member, is only payable where a member has indicated on a Beneficiary Nomination form the name of the beneficiary to whom the funeral benefit payment should be made. If no Beneficiary Nomination form has been completed, the funeral benefit will be paid into the estate late of the member.
The benefit payable in the event of a spouse and children remains unchanged.
HOME LOAN BENEFITS
The Fund has a Pension Backed lending housing loan facility with Standard Bank. Members can borrow towards building, buying or renovating a primary residence. A members’ retirement savings in the Fund is used to guarantee the loan in case he/she defaults on payment or if a member leaves his/her current employer and still owes Standard Bank.
The amount of loan is up to 50% of a member’s Fund Credit, subject to the National Credit Act.
*Fund Credit: All amounts transferred into the Fund and the retirement funding contributions by the member and employer as well as the investment return earned by the Fund.
**Paid-up family funeral benefit: If a member dies or is permanently disabled before age 65, the dependents will be covered for funeral benefits until the date the member would have reached age 65.