fundtalk Welcome Do you like the new-look newsletter? Call Centre Payment of pension benefits

Transcription

1 fundtalk Second Edition 2013 The quarterly newsletter for members of the Government Employees Pension Fund Payment of pension benefits PAGE 2 Tax Directives: All you need to know PAGE 4 Unsecured Lending It can be a TRAP! PAGE 8 Welcome We are proud to announce that your pension fund is growing and going from strength to strength. GEPF received the inaugural Africa investor African Pension Fund Initiative of the Year award. The awards took place at the New York Stock Exchange in September. We hope that you are as proud as we are to be part of such a wonderful fund. Did you know that the GEPF is the largest investor in JSE-listed companies? We at the Government Employees Pension Fund strive to be the best in all we do. We hope this newsletter will help you to learn more about your fund s progress and the benefits we offer. Departmental debt can be deducted from your pension When you leave the Fund because you have resigned or are retiring from public service, GEPF is allowed to deduct certain debts that you may owe to your department. GEPF doesn t automatically deduct debt, however. Find out more about departmental debt, and the processes that it entails on page 4. Scan this QR Code and go straight to our website If you have a smartphone or tablet, you can use the builtin camera to scan this code, which will direct you to our website. If you have an ipad, Samsung Galaxy Tablet, iphone, Samsung smartphone, or any other smartphone, in the Appstore search for Scan QR Code and Barcode. It is a free download and really easy to use. Do you like the new-look newsletter? Please let us know if you like GEPF s new-look newsletter by sending us your comments. The best letter will be published in the next edition and the author will win a GEPF-branded gift. Your opinions and inputs are important to us, so please send your suggestions to: The Editor, GEPF Communication, Private Bag X63, Pretoria, 0001 Scan CODE Call Centre

2 GEPF and its Principal awarded for their exceptional business practices John Oliphant Dear GEPF member We are very proud to be able to inform you that GEPF was awarded the first Institutional Investor of the Year Award at the Africa investor (Ai) Investment and Business Leader Awards held on Friday, 10 October 2013 at a gala event in New York. While this award is itself a very notable achievement, GEPF s Principal Executive Officer, John Oliphant, was also named Up and Coming Future Leader of the Year by Ai. The international Africa investment (Ai) Awards were created to reward outstanding business practices, economic achievements and investments across Africa, recognising the institutions and individuals improving the continent s investment environment. Mr Oliphant feels that, as Africa s largest pension fund, GEPF has a responsibility to ensure its investments serve the long-term interests of all of its stakeholders and make significant and sustainable contributions to the infrastructure and development of Africa. For GEPF, receiving these two awards means that the investment community is recognising, in Mr Oliphant s words, The valuable work we are doing. The winning of this award shows the strength and importance of the pension fund of which you are a member. It also further shows that the Fund is administered in a way that is sustainable and that is helping to grow both our country and our continent. Our offices will be closing over December Our offices will be closed from the 27th to the 31st of December If you have any queries or concerns that need to be addressed to our offices, please keep this in mind. 2 fundnews Second Edition 2013

3 Payment of pension benefits don t be fooled by rumours An unfounded rumour is spreading regarding GEPF pension payments. It is important for all GEPF members and pensioners to know that GEPF will continue to pay all benefits due to members leaving according to the rules. This means that those who are entitled to a once-off lump sum payment will receive this payment, while those entitled to a monthly pension over and above the once-off lump sum payment will receive this money. There are very strict rules about the kind of benefits that GEPF must pay and how the money collected must be invested and safeguarded. These rules are spelled out in a special law called the Government Employees Pension (GEP) Law. The aim of this law and the rules that guide the Fund is to ensure that GEPF puts the interests of its members first at all times. Your benefits are guaranteed All GEPF benefits are defined in the GEP Law and rules, which is why GEPF is called a defined benefit fund. The advantage of belonging to a defined benefit fund is that the benefits are guaranteed. You, as a GEPF member, whether an active member or pensioner member, will never receive less than the benefits that you qualify for according to the law and the rules. Your pensions are safe: GEPF is financially sound. There is no cause to fear that your benefits will not be paid going into the future. 3 fundnews Second Edition 2013

4 What is departmental debt and how can it affect your pension? GEPF is administered through the Government Employees Pension (GEP) Law. According to this law, the Fund is allowed, but is not obligated, to deduct departmental debt when you leave the Fund. To be clear, however, GEPF isn t a debt collection agent for employer departments. Before GEPF can deduct any departmental debt, it must comply what is called fair administrative action. This means that the Fund must allow both the employer and the employee the opportunity to give reasons why the debt should, or should not, be deducted. What must be done before departmental debt can be deducted? Before GEPF can consider deducting departmental debt from a member s benefits, the following must have taken place in terms of fair administrative action: The employer must inform the employee of the proposed deduction and the amount; The employee must be given a reasonable opportunity to make representations to the employer and/or GEPF regarding the deduction; The employee must be informed of his or her right to make representations directly to GEPF; The employer must supply GEPF with all relevant documents motivating its request for the deduction; The employer must submit the representations to GEPF; and GEPF must apply its mind independently and decide whether or not to deduct the debt. What types of debt may be deducted? The following debts may be deducted from a person s benefits when they leave the Fund: Contractual debt for example study loans, housing loans and personal loans. Money accidentally paid to the employee for example an overpaid salary where the employee resigns without working his or her full notice period. Any other debt amount which is not caused by the misconduct, intentional criminal conduct or negligent actions (delict) of the employee. Any amount of loss suffered by the employer through theft, fraud, negligence or any misconduct on the part of the employee. However, before such debt can be deducted, the employee must acknowledged the loss in writing or the loss must have been proved in court. When will GEPF not deduct departmental debt? GEPF doesn t automatically deduct debt. It must first carefully consider the interests of both the employer and the employee. The following are a few examples of debts GEPF will not deduct: If the employer has not given enough evidence to prove a contractual right to the payment of the debt; If the employer has not provided an acknowledgement of debt or a court order; Where the debt claimed is subject to any form of continuing legal action; Where there are any factual disputes relating to the debt which require arbitration or adjudication; 4 fundnews Second Edition 2013

5 Where the employer has not provided a properly completed GEPF Departmental Debt Claim Form; Where GEPF will possibly suffer prejudice by deducting the debt; and Where the debt amount claimed is extreme and where the employer hasn t done everything possible to recover the debt before the employee left service. While there are some cases where GEPF can and does deduct departmental debt, the Fund doesn t act as a debt recovery agency for employer departments. Thus employers may not withhold the submission of exit documents to force any of their employees to acknowledge debt. Tax directives: an integral part of GEPF s processes TAX DIRECTIVE A document that tells your pension fund how much tax you owe to SARS What is a tax directive? A tax directive is issued by the South African Revenue Services (SARS) to instruct a pension fund on how much tax to deduct from lump sum payments (gratuities). Why is it important to GEPF? In order to pay lump sum benefits, we first need to receive a tax directive from SARS. The process of requesting and receiving these directives is thus fundamentally important to our operations. How does the process work? SARS has an automated system in place that allows external organisations, like GEPF, to request tax directives. Such organisations submit files that contain requests for directives to SARS. The directive request is then evaluated based on the status of the taxpayer. SARS then responds, letting the Fund know what must be done. If there is any tax that needs to be paid according to SARS, it is deducted from the lump sum and is paid directly to SARS. What does this mean for GEPF members? GEPF is required to pay tax directly to SARS based on the amount stated in the tax directive. The Fund does not decide how much tax needs to be paid and it is required by law to deduct the amount before payment. This can delay payment of benefits and so we request that you keep your tax affairs in order to ensure the fast and efficient payment of benefits from GEPF. 5 fundnews Second Edition 2013

6 Don t fall into the unsecured lending trap When you re looking to take out loans in South Africa, you have two choices: secured or unsecured. Secured loans are those that you provide security for in the form of an asset (your house or your car). If you default (are unable to pay), the credit provider can sell the asset to make up the outstanding amount. When a loan is unsecured, it means that you provide no security, only the promise that you ll pay back the loan amount, however, the penalties of not repaying the loan are very harsh. SECURED You provide security an asset to promise you will repay the loan. If you do not repay the loan, the asset is taken instead. UNSECURED No security provided High interest rates Very risky! There was once a time when an unsecured loan was only used as an emergency loan that you needed for a necessary but usually unexpected expense. Today, it is a debt trap. Moneylenders (loan sharks, mashonisa), including banks, are now giving cash as unsecured loans at very high interest rates and not just for emergencies. They know you will pay because they have very strict collection methods. Five years ago, the average amount that someone borrowed on an unsecured loan was R5,000. The average time to pay this off was about 29 months. Today, the average amount being borrowed is R12,000 to be paid off over 48 months. This is good business for the moneylenders, and it is growing. The interest charged on unsecured loans has also increased. If you borrowed R10,000 in 2007, your interest charges would be R5,800. So you would pay back R15,800. For example, if today you borrowed R10,000 to put down as a deposit on a car or house, your total interest charges would be R10,200 that is 77% more. So you would pay back R in total. Reasonable borrowing costs should be around 13.5% (prime + 5%) per year and the time to pay it off would be 42 months. When you take an unsecured loan, the moneylenders charge an average interest of 40%. If you are unable to make payments, then the moneylenders will charge you additional costs, increasing your debt. You can see what a big debt trap these loans are. 6 fundnews Second Edition 2013

7 One of the ways that the moneylenders make sure that you pay them back is called a garnishee order or emolument attachment order (EAO). This means that the moneylender takes what is owed directly from your salary every month or week before you are paid. This is dangerous for you and can mean that you will not be able to buy basic household items. The National Credit Regulator (NCR) is there to help you understand the dangers of unsecured lending. However, if you are having a problem with unsecured loans or are thinking of taking out an unsecured loan, first talk to your human resources manager at work. The best advice you can take is to rather save up for what you need and then buy it for cash and avoid the trap of an unsecured loan. If you do not pay back an unsecured loan, you may lose your whole salary! Source: Mazi Visio Management Company Unsecured Lending Presentation to GEPF (2013:9) Source: Mazi Visio Management Company Unsecured Lending Presentation to GEPF (2013:9) Source: Mazi Visio Management Company Unsecured Lending Presentation to GEPF (2013:24) Keeping in touch with our progress Mobile offices GEPF s mobile offices continue to service members around the country, including those living in rural areas. Notification of the location of the mobile offices are advertised in the press so keep an eye out for our visit to your area! Call Centre technology changes GEPF is improving its Call Centre by implementing state-of-the-art technology and offering training to staff to enable them to provide a higher level of customer service to callers. To experience these changes yourself, feel free to contact the Call Centre on New security software implemented GEPF transfers important personal information to banks, SARS, medical aids and the Post Office on a daily basis. In order to ensure that this information is safe from intervention, new software and systems have been deployed. DISCLAIMER The information provided in this document is protected by applicable intellectual property laws and cannot be copied, distributed or modified for commercial purposes. While every effort has been made to ensure that the information contained herein is current, fair and accurate, this cannot be guaranteed. The use of this information by any third party shall be entirely at the third party s discretion and is of a factual nature only. The information contained herein does not constitute financial advice as contemplated in terms of the Financial Advisory and Intermediary Service Act, GEPF does not expressly or by implication represent, recommend or propose that products or services referred to herein are appropriate to the particular needs of any third party. GEPF does not accept any liability due to any loss, damages, costs and expenses, which may be sustained or incurred directly or indirectly as a result of any error or omission contained herein. 7 fundnews Second Edition 2013

8 OUR Offices HEAD OFFICE (Gauteng: Pretoria) 34 Hamilton Street Arcadia Pretoria PROVINCIAL OFFICES Eastern Cape No. 12, Global Life Office Centre Circular Drive Bhisho Free State No. 2 President Brand Street Bloemfontein KwaZulu-Natal 3rd Floor, Brasfort House 262 Langalibalele Street Pietermaritzburg Limpopo 87(a) Bok Street Polokwane Mpumalanga 19 Hope Street Ciliata Building Block A, Ground Floor Nelspruit North West Mmabatho Mega City Office No. 4/17 Ground Floor, Entrance 4 Mafikeng Northern Cape 11 Old Main Road Kimberley Western Cape 21st Floor, No. 1 Thibault Square Long Street Cape Town SATELLITE OFFICES Johannesburg 2nd Floor, Lunga House, 124 Marshall Street (Cnr Marshall & Eloff Gandhi Square Precinct) Marshalltown Port Elizabeth Ground Floor, Kwantu Towers Sivuyile Mini-Square, next to City Hall Mthatha 2nd Floor, PRD Building Cnr Sutherland & Madeira Streets Durban 8th Floor, Salmon Grove Chambers 407 Anton Lembede Street OUR CONTACT DETAILS Toll free no: Fax: Web address: enquiries@gepf.co.za Postal address: GEPF Private Bag X63 Pretoria