NEW MEMBER BENEFIT SESSION
AGENDA ❑ Structure ❑ Management ❑ Membership ❑ DPA & CoE ❑ Contributions ❑ Transfers ❑ Investments ❑ Risk Benefits ❑ Resources
Structure of the UCTRF The UCTRF is a defined contribution provident fund. The full contribution is made by UCT as your employer. The full benefit is payable as a lump sum in cash (subject to tax) on retirement.
Management of the UCTRF Trustee elections take The UCTRF is managed by place every 3 years. a Board of 14 Trustees, 7 of whom are elected by the (The next elections will be members. held in September 2019.) The Board appoints a The Board has to ensure Principal Officer, who is that members' and responsible for compliance beneficiaries’ interests are and the day-to-day running protected. of the UCTRF.
UCTRF Membership ❑ All staff with whom a contract for permanent employment with the Employer has been concluded, irrespective of the end date of such contract, are required to join the UCTRF. ❑ You can only leave the UCTRF when you leave the Employer’s service: Resignation, retrenchment, Retirement dismissal (but you can choose Death (but you can choose to leave your benefit to leave your benefit in the UCTRF) in the UCTRF)
Understanding your DPA & CoE Your Deemed Pensionable Amount (DPA) is a percentage of your Cost of Employment (CoE). You may elect this This figure is used to percentage when you Everything to do with calculate the amount join the Employer and the UCTRF works on allocated to the when your salary UCTRF and UCTRF changes (usually at the DPA. the beginning of each benefits. year).
Understanding your DPA & CoE The default DPA percentages are: Up to R150 000: 70% R150 001 to R250 000: 75% R250 001 to R400 000: 78% R400 001 and above: 80% However, you may choose a DPA between 100% and 50% of your CoE.
Effect of DPA on Retirement Benefit We strongly recommend that you use The lower your DPA percentage, the the Retirement Provision Calculator more your take home pay. on the UCTRF website to get an understanding of whether you are BUT you may not have sufficient saving enough for retirement. retirement savings to live comfortably http://uctrf.co.za/23/L/Retirement- when you retire. Provision-Calculator
Contributions to the UCTRF The Employer makes the full contribution to the UCTRF out of your CoE. The current structure is as follows: Category Contribution rate** Retirement savings 20.066% of DPA Risk benefits/Admin* 2.434% of DPA Total 22.5% * The risk premiums and administration fee are revised each year. ** T2 staff employed prior to 1 July 2017 have a different contribution rate.
Additional Contributions You can request that the Employer make additional contributions to your UCTRF retirement savings: Between 1% and 10% as additional retirement savings There is no deduction from these contributions toward risk premiums or administration fees, so they are pure retirement savings.
Tax on Contributions Your total contributions to pension, provident or retirement annuity funds totaling the lesser of: 27.5% of taxable income R350 000 Whichever amount is less will be tax free. Any balance will be taxable, but will be paid out tax free on leaving the UCTRF.
Transferring into the UCTRF from another fund Fund Type Advantages Disadvantages • • Previous Employer’s Tax-free transfer You may be able to withdraw cash • Provident Fund Probable saving in fees from your previous fund (subj to tax) • • Retirement savings in one place Check you are happy with investment choices available in UCTRF • • Previous Employer’s Probable saving in fees Taxable • • Pension Fund Retirement savings in one place You may be able to withdraw cash from your previous fund (subj to tax) • • Provident Preservation Tax-free transfer You can make one cash withdrawal • Fund Probable saving in fees from a preservation fund (subj to • Retirement savings in one place tax) • Check you are happy with investment choices available in UCTRF Pension Preservation Not available (unless you treat it as a Fund cash withdrawal from the preservation fund) Retirement Annuity Not available
What you need to know before you take cash from a previous fund It is important to understand the implication of taking cash on your retirement benefit. Loss of Tax capital Loss of Up to 36% interest earned Reduced Reduced tax relief at retirement retirement benefit
Death Benefits UCTRF Accumulated Retirement Savings, plus UCTRF Death Benefit Risk benefit of 6 times annual DPA* (default) Separate Death Benefit (unless paid • Compulsory: 1 x DPA** out on permanent disability) *Not applicable to T2 staff whose current contract of employment started prior to 1 July 2017. ** For T2 staff whose current contract of employment started prior to 1 July 2017 - 3x DPA
Changing your Death Benefits UCTRF Death You may elect to reduce your death benefit to a minimum of 4x DPA inclusive of your UCTRF Accumulated Retirement Savings. The difference in your premium will Benefit be allocated to your Accumulated Retirement Savings. Separate Death • Voluntary: up to an additional 4x DPA* Benefit The current cost of 1x DPA is 0.24% of DPA. The option to increase your voluntary cover is only available on joining the UCTRF, when the number of your dependants increase (e.g. if you get married or have a child) and then in October 2019 and each October thereafter. Alternatively you may increase you cover if you are prepared to provide medical evidence of your good health to the insurer at your own expense. * For T2 staff whose current contract of employment started prior to 1 July 2017 - up to 2x DPA
What is the difference between the UCTRF Death Benefit and Separate Death Benefit? Separate GLA (tax free) UCTRF GLA (taxable) The UCTRF Board must make a disposition in terms Falls outside the Pension Funds Act of S37C of the Pension Funds Act The UCTRF Board must determine your Pays directly to the beneficiary you have dependants and nominees with the guidance of nominated (or yourself if disabled) your recommendation Pays in event of death or permanent disability Pays in event of death
Trustee S37C process The Board is obliged to The Board must pay benefits in consider all dependants as the proportion it judges to be defined by law (but not fair, so we need as much necessarily to make allocations information as possible . to them). Your recommendations will be an important guide to the Board. If you would like to motivate your recommendations, please attach a letter of motivation to your nomination form. Please draft your motivation on the assumption that it will be acted on in the next twelve months.
Nomination of Beneficiaries You MUST complete the Nomination of Beneficiaries form. It is important to update your form if your circumstances change. You can do this online.
Death Benefits Funeral R19.75 per month forms part of 22.5% contribution Cover* Lump sum benefit • Main member, Spouse, Child (14-21 years) – R30 000 Cover • Child (6-13 years) – R15 000 • Child (2-5 years) R7 500 • Child (under 2 including stillborn) – R7 500 *Please note: Members will be covered for funeral cover unless they choose to Opt Out of this benefit, in which case the savings in the premium will be allocated to the members’ retirement savings.
Disability Benefits - Cash Lump Sum Compulsory (only payable if you are totally and permanently disabled) 1 times DPA* Voluntary (only payable if you are totally and permanently disabled) If you select additional separate death cover, your lump sum disability cover will be increased to match. * For T2 staff whose current contract of employment started prior to 1 July 2017 - 3x DPA
Disability Benefits – Income Continuation* * Not applicable to T2 staff whose current contract of employment started prior to 1 July 2017 70% of the first R15 000 of monthly DPA, plus 60% of the next R20 000, plus 45% of any DPA in excess of R35 000 per month; and The contribution to the UCTRF will also continue to be paid. Payable on temporary or permanent disability (tax free) after 3-month waiting period (you will need to rely on your sick leave).
Investment Options: Individual Portfolios Portfolio Portfolio Feature / Objective Risk Profile Time Name Type asset class Portfolio A Income Fud Money Inflation + Low 0 – 2 years market 1% instruments Portfolio B Smooth Bonus Smooth Inflation + Medium 3 – 5 years Fund returns; 3% capital guarantee Portfolio C Balanced Fund Market- Inflation + High 7 Years linked 5% Portfolio D Shari’ah Fund Complies Inflation + Medium to 5 – 7 years with Islamic 4% High law
Investment Risk Example of long-term actual returns over the different portfolios achieved over a 23- year period Investment Risk
Life Stage Model Structured Model Normal Retirement Age 65 Invested according to age
Life Stage Strategy
Your Choices ❑ You can change your investment choice. ❑ You can decide how you want to invest your: Accumulated retirement savings (1st switch in each 12 month period between 1 July and 30 June free, subsequent Future retirement savings switches R496 each) (monthly contributions)
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