City of Johannesburg Pension Fund

Transcription

1 future your egg for ITY O OHANNESBURG E N S I O N U N D S E NN STRENGTH i l A est ia depedece th c grow peace of mid a f i develop stability BURG ENSION UND OH RETIREMENT O I TY security ity of ohaesburg esio ud Member Booklet: Your Beefits Made Easy

2 What You Will id I This Booklet: age 1. Itroductio 2. How Does the ud Work? 3. lease Tell Us About You 4. Who Rus the ud? 5. Rules are Rules 6. Who a Be a Member? 7. How do otributios Work? SUMMARY O BENEITS What is My ud redit? 9. What Beefit am I aid Whe I Retire? 10. What Beefit is aid o Leavig the ud Before Retiremet? 11. What Beefit Will Be aid to My amily If I Die? 12. How is Your Death Beefit aid to Your Beeficiaries? 13. What Beefit is aid if I am Too Sick to Work? 14. How do Ivestmets Work? 15. Do You Have More Questios? Nurturig our ud. rotectig our members.

3 1. Itroductio The ity of ohaesburg esio ud () has a reputatio of beig stable ad reliable, providig you ad your family with beefits whe you retire, leave the ud before retiremet, die or become disabled. Our ud has bee i existece for more tha 50 years, ad we have built our reputatio o protectig our members ad champioig their iterests. However, the has had a facelift ad is ow a defied cotributio fud i terms of the settlemet agreemet with the ity of ohaesburg (see Sectio 2: How Does the ud Work? for more o defied cotributio). The 's priority is to parter you i growig your retiremet savigs, so that you ca retire comfortably i your golde years. We do this by makig sure that our members have the best beefits possible; that the is ru as a tight ship ad makig sure that you, our members, uderstad your rights uder our ud. The mai reaso for belogig to a retiremet fud is to provide you with fiacial security o retiremet. The size of your retiremet beefit depeds both o the fud you belog to, as well as how well you maage your retiremet moies. We ecourage you take resposibility for your retiremet savigs. This meas uderstadig how much you eed to save while you are workig; savig your fud moey for retiremet ad ot spedig it betwee jobs. It also meas savig extra amouts outside of the ud towards your retiremet. Why Savig for Retiremet is So Importat: There are 2 parts to your retiremet savigs: cotributios ad ivestmet returs. Uder the, your moey will grow with ivestmet returs, for the period that you are a member of the ud. Earig a few extra percet every year might ot soud like a lot of moey, but the effect of this over the years is amazig. The reaso for this is compoud iterest, which is iterest o iterest. It's what happes whe ivestmet returs are added to your ud redit, formig a larger base to build up future ivestmet returs. As a example The youger you are whe you start savig for retiremet, the more you will beefit from compoud iterest: Let's say you begi savig at age 25, cotributig R200 a moth to your retiremet fud ad you ear a ivestmet retur of 9% a year Your fried jois your fud at age 45, but cotributes R400 a moth At age 65, you will both have ivested a total of R96,000, but your ud redit would have grow to R884,000, while your fried's ud redit would be worth oly R268,000! The reaso your ud redit has grow so much more tha your fried's, eve though you both ivested the same amout of moey, is because your ud redit eared compoud iterest for 20 extra years! As your ivestmets grow bigger, they are able to grow faster! That is oe of the reasos why it is importat ot to sped your retiremet savigs betwee jobs. p a g e 2 ITY O OHANNESBURG ENSION UND

4 2. How Does the ud Work? The is a esio ud: As the is a pesio fud, your cotributios to the ud are tax deductible (your tax is worked out after your cotributios are take off your mothly salary). See How Beig a esio ud Member Saves Tax! Shahid is a member of a pesio fud. He makes mothly cotributios to this pesio fud. Shahid's basic mothly salary is R10,000. If he did ot cotribute to his pesio fud, Shahid would have to pay tax o R10,000 per moth. As a member cotributig to his pesio fud, Shahid would be etitled to take off a maximum of R 750 (i.e. 7,5% of R10,000) per moth from his taxable icome (R 10,000), he would therefore oly have to pay tax o R9,250 per moth. The is a Defied otributio ud: As the ame says, uder a defied cotributio fud, your ud redit is made up of the cotributios paid towards your retiremet savigs A defied cotributio fud works like a bak accout - the more you put i, the more you get out This meas that the higher the cotributios paid towards retiremet ad the higher the ivestmet returs o these cotributios; the higher your ud redit will be Your ow accout i the ud is called your ud redit I this type of fud, all ivestmet returs are paid to your ud redit! 3. lease Tell Us About You We eed your cotact details so that we ca commuicate better with you. Therefore, please fill i the form iside this booklet with your home postal address ad cellphoe umber ad either fax it to (011) or put it ito the boxes i the staff offices. 4. Who Rus the ud? Your Trustees maage your ud. All Trustees have duties of trust (fiduciary duties) set out by the law. That meas Trustees have to aswer to you the members, your beeficiaries, the authorities as well as the employer. The Trustees make all the decisios o how the ud works ad must ru the accordig to its Rules. Your ud is ru by 6 Trustees who are elected by the members (members like you / people you work with) ad 6 Trustees appoited by the employer (the ity of ohaesburg). Member Trustees are elected every 3 years. The Trustees meet officially at least four times every year. Decisios about the ud ca oly be made if at least 6 Trustees are at the meetig. The Trustees take advice from their professioal advisors ad have outsourced the 's admiistratio ad actuarial fuctios to NMG. p a g e 3 ITY O OHANNESBURG ENSION UND

5 5. Rules are Rules The Rules of the set out how the ud must be ru ad what beefits ca be paid. Should there be ay differeces betwee this booklet ad the 's Rules, the Rules will always apply. If you have a disagreemet with the ud, you have the right to address this with the ud or the ity of ohaesburg i writig ad, if you eed to, you ca approach the esio uds Adjudicator. Also, you have the right to look at the 's Rules / other documets, eg the 's fiacial statemets / actuarial valuatios at the 's registered address (see back cover). 6. Who a Be a Member? You ca joi the if you are a employee of the ity of ohaesburg / its associated compaies ad are ot a member of the eoburg Retiremet ud or other fud i which your employer participates. If you would like, o applicatio, you ca trasfer from the eoburg Retiremet ud to the. 7. How Do otributios Work? How Much Do Members otribute to the? Whe you coverted from defied beefit to defied cotributio (as at 1 October 2008) you cotiued makig member cotributios at 8.5% or 9.5% of your pesioable salary to the. The rules allow members the choice to cotribute a lower amout towards the, beig 7.5% of your pesioable salary. You will be offered this choice as at 1 uly of each year. How Much Does the ity of ohaesburg otribute To The ud? The ity of ohaesburg (your employer) cotributes 15% towards the for you, every moth. osts will be take off this 15%. The rest will be paid ito your ud redit. osts Deducted off Employer otributio The followig costs are take off the employer cotributio, every moth: You ca also make additioal volutary cotributios to the ud. R1,800 of these volutary cotributios will be tax free, per year. The rest of your volutary cotributios will be taxed. osts: Death beefit isurace cost Disability beefit isurace cost Admiistratio osts p a g e 4 ITY O OHANNESBURG ENSION UND

6 The Trustees have fought for the lowest ad best possible rates from the top SA isurace compaies for your death ad disability beefits, so that as much of the employer cotributio as possible ca be paid towards your ud redit. SUMMARY O BENEITS As a member of the, you eed to kow what beefits you will be paid o leavig the ud, or if you die or become disabled, ad you eed to tell your family about these beefits. The followig beefits are paid from the : 8. What is My ud redit? What if I am o a Total ost to ompay ackage? If you are o a total cost to compay package, your pesioable salary will be based o a percetage of your total package (miimum 60% maximum 100%). Also, you ca choose betwee a employer cotributio of: 15%; or 17.5%; or 20% You will be offered this choice as at 1 uly of each year. Whichever way you leave the ud, you will be paid your ud redit. Your ud redit works like this: Beefits to You / Your amily Beefits o leavig the (due to resigatio / retrechmet / dismissal / retiremet) Death beefits Disability beefits RI Member otributios Employer otributios Disability beefit isurace cost Death beefit isurace cost ud Expeses Ivestmet returs ud redit 9. What Beefit am I aid Whe I Retire? What Beefit am I aid at Normal Retiremet Age? Whe you retire at Normal Retiremet Age Normal Retiremet Age is age 63 You may exted your Normal Retiremet Age to 65 if you iform the employer i writig 9-12 moths before your Normal Retiremet Age p a g e 5 As a member of a pesio fud, you ca take a maximum of 1/3 of your ud redit o retiremet, as cash. The balace must be used to buy a auity from a isurace compay or aother approved retiremet fud. NB: Oce you retire from the, o more will be due to you. That is why it is importat to buy the best auity for you, o your retiremet/ivest your lump sum wisely. Speak to a fiacial plaer if you eed advice. ITY O OHANNESBURG ENSION UND

7 a I Retire before I Reach Normal Retiremet Age? Yes, you ca retire early (before Normal Retiremet Age) from age 55 (or age 45 if you have 15 years of service). You will be paid your ud redit. Remember, if you do retire early, your ud redit will be lower tha if you retired at Normal Retiremet Age, as there will be less time to build up ivestmet returs ad lower cotributios paid to the ud. a I Retire After I Reach Normal Retiremet Age? Yes, you ca retire after Normal Retiremet Age up to age 65, provided you have advised your employer, as described above. Whe you retire, you will be paid your ud redit. However, your disability beefit stops, after you reach Normal Retiremet Age. RETIREMENT AHEAD What Happes If I Retire Early Due To Ill-Health? If you become too sick to carry o doig your job ad you do't qualify for a beefit from the disability icome policy but are totally ad permaetly disabled, you ca be retired due to illhealth. I this case, you will be paid your ud redit. 10. What Beefit is aid o Leavig the ud Before Retiremet? If you resig, are dismissed or are retreched, you will be paid your ud redit. The Trustees recommed that you carefully cosider what to do with your withdrawal beefit if you leave the ud before you retire. It is ot recommeded that you take your moey i cash, but rather trasfer it to aother approved fud. 11. What Beefit Will be aid to My amily If I Die? The pays a excellet beefit if you die while you are still i service with your employer. This beefit is far better tha most fuds provide! If you die while you are workig for the ity of ohaesburg, you will be paid: Your ud redit uder the icludig ay value still i the M 2 x your yearly pesioable salary LUS You ca buy a extra death beefit if you feel that you eed more death cover. But, be careful: the more you sped o death beefits, the less of the employer's cotributio goes towards your ud redit. You must decide what is more importat to you a higher death beefit, or higher retiremet savigs. How does Buyig Extra Death Beefits Work? You ca use 1%, 2% or 3% from the total employer cotributio of 15% to buy extra death beefits. The amout of death cover you get for this cotributio will deped o your age whe you buy this extra death cover. You ca choose to buy extra cover or lower your extra cover at 1 uly of each year. Have a look at this table which shows you the latest amouts of death cover you will have if you use 1%, 2% or 3% from the employer cotributio to buy more death beefits: p a g e 6 ITY O OHANNESBURG ENSION UND

8 Age Extra death cover Extra death cover Extra death cover bought with 1% bought with 2% bought with 3% Up to x aual salary 4.55 x aual salary 6.82 x aual salary x aual salary 4.09 x aual salary 6.14 x aual salary x aual salary 3.64* x aual salary 5.45 x aual salary x aual salary 3.18 x aual salary 4.77 x aual salary x aual salary 2.73 x aual salary 4.09 x aual salary x aual salary 2.73 x aual salary 3.41 x aual salary x aual salary 2.36 x aual salary 2.73 x aual salary x aual salary 1.25 x aual salary 2.27 x aual salary * recious' extra death cover i the example below A example of how Buyig Extra Death over Works recious is 40 years old. recious feels that her childre are still youg, ad worries that her death beefit of her ud redit plus 2 x her yearly pesioable salary is ot eough to look after her family if she dies early. She decides to buy extra death cover with 2% of the employer's cotributio. Her total death cover will ow be: Her ud redit; plus 2 x yearly pesioable salary; plus 3.64 x yearly pesioable salary (bought with 2%of the employer's cotributio) This meas recious' total death beefit is her ud redit plus 5.64 x her yearly pesioable salary. recious also uderstads that 2% less will ow be paid towards her ud redit. 12. How is Your Death Beefit aid to Your Beeficiaries? Q1: Whe Should I fill i a Nomiatio of Beeficiary orm? A1: You should fill this form i wheever your depedats chage (for istace, if you get married or divorced, or have a child). Q2: Who must I retur my form to? A2: lease retur your form to the esio ud Office or put them ito the boxes provided i the staff offices. Q3: Will the Trustees pay out my death beefit to the beeficiaries set out i my form? A3: Not Necessarily. Your omiatio of beeficiary form helps the Trustees to kow who your depedats are ad how you would like your beefit to be paid, if you die as a member of the ud. However, S37 of the esio uds Act gives Trustees a duty to distribute death beefits i the most fair way to your beeficiaries. Some importat otes about your death ad disability beefits: The isurace compay sets limits from time to time o the amout of cover that they will give you without requirig medical examiatios for evidece of good health. Util the isurace compay accepts your cover over this limit, your death ad disability beefits will be restricted to this level of cover There are times whe the isurace compay may ot pay out death ad disability beefits, eg if you itetioally hurt yourself laims resultig from certai evets will ot be paid out by the isurace compay. ollowig the evets of 11 September 2001, all isurace compaies do ot pay out isurace beefits if someoe dies or becomes disabled as a result of uclear, biological or chemical weapos attacks. p a g e 7 ITY O OHANNESBURG ENSION UND

9 13. What Beefit is aid if I Am Too Sick to Work? While you work for your Employer, you are covered by disability isurace if you ca't work because of a accidet or sickess. A disability icome beefit is provided through the employer's policy of isurace. This beefit works as follows: You will wait 3 moths before the disability beefit starts to pay out, because the isurace compay eeds to make sure that you really are disabled The mothly icome beefit paid will replace 80% of your pesioable salary, up to a maximum of R100,000 (100% of your pesioable salary ca't be paid to you, because the isurace compay eeds you to wat to get better) You will be paid this beefit if you ca't do your ow job. The isurer will do a assessmet to see whether or ot you ca do your ow job 2 years after your claim is accepted the isurer will do aother assessmet. If you ca do other work, oce the isurer has looked at your educatio, traiig ad experiece, your disability beefit ca be stopped or reduced. If you still ca't retur to work, you will receive the disability beefit util you die or reach Normal Retiremet Age The employer will cotiue to pay cotributios to the for you. You must pay your member cotributios out of your disability beefit paid to you each moth Each year that you are disabled, you will receive a icrease to your disability beefit i lie with iflatio (these are paid istead of a salary icrease) Your disability beefit will be taxed i the same way as your salary Should you die while receivig this beefit, your beeficiaries will be paid your full death beefit. Iflatio is the rate at which the prices of products ad services go up over time. Iflatio gradually reduces the value of moey - for example, a carto of milk that cost R3 te years ago, costs R6 today. Example of how the disability icome beefit works Example of how the disability icome beefit works: aul had a car accidet ad a disability icome beefit was offered through his ud. He was accepted by the isurace compay to receive beefits. At the time of his accidet, he was earig a mothly esioable Salary of R10,000. His disability icome beefit was: Beefit: 80% of esioable Salary: R8,000 Less his cotributios to the ud at 7.5% of esioable Salary R750 Disability beefit before tax R7,250 p a g e 8 ITY O OHANNESBURG ENSION UND

10 14. How do Ivestmets Work? Settig the apart from other, similar uds, the gives you a choice o where to ivest your ud redit. You ca chage your ivestmet optio, at o cost to yourself, twice a year durig auary, April, uly or October. If you make more tha two chages to your ivestmets, a additioal expese charge will be made agaist your ud redit. If you do't make a choice, you will be put ito the default ivestmet portfolio, called the lifestage portfolio. lease look at / ask for the separate pamphlet which sets out your ivestmet optios. 15. Do You Have More Questios? We would like you to be comfortable with the. If you have ay more questios, or eed ay clarity, please cotact the esio ud's Office o: tel umber: (011) / fax umber: (011) ; or NMG o (011) You ca also cotact oe of the 's Trustees (a list of the trustees is o the iside back cover). ud Name: ity of ohaesburg esio ud SB Referece Number: 12 / 8 / 3722 p a g e 9 ITY O OHANNESBURG ENSION UND

11 Do You Kow Who Your urret Trustees are? The 's curret Trustees are: Adrew Rawlis harity hisadza Eugee Du reez Imra Zardad ae Eagle Leo De Bruy Leo Va Toder Zama Nyawo Nomsa Mgida Observers: Garver Machethe Hedrik orter ricipal Officer: Lidy Wigrove-Gibso hairperso: ieter Louwres Deputy hairperso: races eig p a g e 1 0 ITY O OHANNESBURG ENSION UND

12 otactig the : The esio ud Office's otact Details: hysical Address: 1st floor West Wig Oakhurst Buildig 11 / 13 St Adrews Road (Behid Mike's Kitche), arktow Telephoe umber: (011) ax umber: (011) addresses: treshaj@telkomsa.et (Tresha aipath - esio ud Office) The 's Details: ud Name: ity of ohaesburg esio ud SB Referece Number: 12 / 8 / 3722 's Registered Address: 1st floor West Wig Oakhurst Buildig 11 / 13 St Adrews Road, arktow The Admiistrator's otact Details: NMG osultats Actuaries Admiistrators (ty) Ltd: (011)