EMPLOYEE BENEFIT UPDATE

Transcription

1 EMPLOYEE BENEFIT UPDATE

2 B e n e f i t T r e e Your Benefit Tree School Fees

3 Classic Life Stages Buy House Start Family Retire Graduate Marry

4 Benefit Environment Regulation Economic environment Employee appreciation generally low and employer sometimes not aware of true cost Technology allows more information and better delivery of benefits Pressure to unlock value with benefits

5 Employee Housing Effective 01 March 2014 Employer transfer ownership of home at below market value results in fringe benefit. No taxable benefit where Employees taxable income below R200,000; and Market value of house below R350,000

6 SARS Response Market value of house increased to R450,000 R250,000 given annual inflationary adjustment Consider Trust scheme and until law is more refined.

7 Income Disability Policies Effective 01 March 2015 will be fully taxable and no employee deduction. As a result, the implementation of the proposal will be delayed by a year to allow an additional period of time for employers and employees to renegotiate their income protection policies

8 Income Disability Policy - Example

9 Leave Policy The Record Leave is part of Reward Strategy 54 work days per annum Plus December 24 th to January 2 nd Maximum accrue is 220 work days

10 Medical Aid Small Case Study Discovery Classic Comprehensive plan offers a member very high limits of day-to-day care as well as 63 chronic conditions. Where chronic medication or above threshold, there may be more appropriate plan options to consider. Consider downgrade to a Classic Priority plan and add a Gap cover policy to the arrangement, on average the annual savings would be sizeable. The Priority plan has a list of in-hospital procedures that have an upfront co-payment which cannot be claimed back from the medical aid, however by adding a Gap Cover policy, these copayments will be reimbursed to the member directly. Option 2013 Proposed Option Current Cost 2014 Cost with Gap Cover implied 2013/14 Increase Annual Saving 2014 Classic Comprehensive Classic Priority R R % R Classic Comprehensive Classic Priority R R % R Classic Comprehensive Classic Priority R R % R Classic Comprehensive Classic Priority R R % R Classic Comprehensive Classic Priority R R % R

11 Retirement Reform Effective 01 March 2015 Perfect opportunity to re-design and unlock value Most employees will see no impact (27.5% & R350,000) Pension / Provident & Retirement Annuity treated equal Preservation on new contributions only & annuitisation (provident) only where employee below 55 years on 01 March 2015.

12 Retirement Reform - Example

13 Retirement Fund Performance Best Worst Sector Average Personalised (blend) 27.46% 6.72% 19.09% 24.82% Regulation 28 Compliant Fund Performance over 1 year 25% into cash, bond & property 75% equity Smooth bonus or cash = 4% Difference between best and worst is 20.74

14 Costs No Fees 12% Compound With Fees of 3% 9% Compound Year Fund Value Fund Value Rand Difference , ,00 0, , , , , , , , , , , , , , , ,42

15 Cellular Phones Allowances Taxed and no deduction for employee Itemized billing too much admin See SARS Draft Interpretation Note on Employer Provided Telephones or Computer Equipment or Employer Funded Telecommunication Services Clear Leading Practice on financial / admin / tax analysis for employer provided phones with monetary cap on employee and mainly business sign-off.

16 Company Vehicles / Travel Allowance Company vehicles: 60% to 65% on business Logbook Compulsory Insured Fuel Card Limit on Private Usage (say, 18,000km per year) Employee pay lease rate where above limit Quantify benefit and part of Reward Statement Use determined value or actual lease of vehicle (takecare on specific rules different types of leases)

17 Company Vehicles / Travel Allowance Travel Allowance / Reimbursement Business Insurance? Never Fuel Card Rate per kilometer on benchmark vehicle - reimbursements Choice to select Travel Allowance (code 3701 and 3702) or tax-free reimbursement (code 3703)

18 Employee Vehicle Management Eqstra Survey and Study on Vehicle Ownership Bulk insurance and tracking Buy cheaper and sell better, maintain cheaper etc.

19 Bursaries & Scholarships for Relatives Effective 01 March 2013 Threshold from R100,000 to R250,000 R10,000 to Matric R30,000 for Tertiary Per Relative

20 Group Personal Accident Confirmed no tax benefit where at place of work. Taxable where otherwise provided (any accident). Always fringe benefit tax implication (some are brave) The value of the benefit?

21 Bank Costs Foreign Transfer Normal transfer 3% to 3.5% of value lost for individual Providers that do bulk buying and facilitating transfer On USD10,000 per month saving is USD300 per month

22 Examples

23 Take Home Slides & Calculator Join Employee Benefits Forum SARA Tax, Payroll and Benefit Training next Week Tuesday and Wednesday Cape Town, Davison-Lancaster Peter SARA Tax, Payroll and Benefit Training on 13 th and 14 th Durban. Megan Shepstone,

24 For the Future Benefits belong in reward space Ask tough questions It is your employees money Buy bulk and align with personal needs