Frequently Asked Questions

1. Membership

 

a) Who may belong to the Fund?

An eligible employee is someone whose contract of employment is valid for a period exceeding one year, or someone whose employment is subject to the ongoing receipt of a grant sufficient to cover the contributions to the Fund.

 

b) Must I contribute to the Fund?

Members are not required to contribute to the Fund. The University contributes 23.5% of your Retirement Funding Income (RFI) into the Fund each month in respect of retirement benefits, insured benefits and expenses.

 

c) What does share of Fund mean?

Share of Fund is the total of:

 

All your accumulated contributions: This includes all contributions invested on your behalf including:

  • The contributions your employer made on your behalf;
  • Any transfer values received on your behalf.

Less expenses: The fund operating costs are deducted from the contributions before it is invested.

Plus investment return:

 

d) Who are the Trustees of the Fund?

The members of the Board of Trustees are: The investment return represents the returns earned on net contributions allocated to your Share of Fund during the period. The investment return will depend on the performance of the portfolios.

 

Employer Appointed Trustees

Member Elected Trustees

Professor C Auret

christo.auret@wits.ac.za

Professor Mtendekwa Mhango

Mtendeweka.Mhango@wits.ac.za

Mr Daniel Gozo

Daniel.Gozo@wits.ac.za

Mr Robert Sharman

Robert.Sharman@wits.ac.za

Dr Kgomotso Kansonkola

Kgomotso.Kasonkola@wits.ac.za

Mr Daniel Stewien

Daniel.Stewien@wits.ac.za

Professor Chris Malikane

Chris.Malikane@wits.ac.za

Ms Adele Underhay

Adele.Underhay@wits.ac.za

Chairman

Principal Officer

Professor Mtendekwa Mhango

Mtendeweka.Mhango@wits.ac.za

Mr Jeremy Gill

Jeremy@jjgconsulting.co.za

 

2. Withdrawal benefits

 

a) What is my benefit when I leave the University?

If you leave the University’s service by means of resignation, retrenchment or dismissal, you will receive a benefit equal to your full Share of Fund. You may you may choose to transfer your benefit to another approved fund, including your new employer’s fund, a preservation fund or a retirement annuity. You may also choose to be paid your benefit as a cash lump sum, although tax will first be deducted.

 

b) What are the tax implications on taking my withdrawal benefit in cash?

 

On withdrawal, the benefit will be taxed. Tax is calculated according to the following table which is applicable for the year of assessment ending 28 February 2014:

TAXABLE AMOUNT RATE OF TAX
R0 – R25 000 0%
R25 001 – R660 000 18% of the amount above R25 000
R660 001 – R990 000 R114 300 + 27% of the amount above R660 000
R990 001 and above R203 400 + 36% of the amount above R990 000

 

This table applies to the combined withdrawal benefits that become available to you on or after 1 March 2009.

On retrenchment, the benefit will be taxed. Tax is calculated according to the following table which is applicable for the year of assessment ending 28 February 2014:

TAXABLE AMOUNT RATE OF TAX
R0 – R500 000 0%
R500 001 – R700 000 18% of the amount over R500 000
R700 001 – R1 050 000 R36 000 + 27% of the amount over R700 000
Amount exceeding R1 050 000 R130 500 + 36% of the amount over R1 050 000

 

3. Retirement benefits

 

a) What is my benefit when I retire?

On normal and early retirement, your benefit value will be equal to your full Share of Fund at that date.

 

b) How much of my Share of Fund can I take in cash?

According to the rules of the Fund, on retirement a member may request the Trustees to permit the proceeds, or a portion of the proceeds, to be paid in the form of a cash lump sum. The trustees have to ensure that they have fulfilled their legal obligations to the member and specifically also to the spouse of the member. They have to make sure that the member and his/her spouse are aware of the potential loss of income by commuting their benefit, or a portion of their benefit, in the form of a lump sum. Members are therefore required to complete the application for a lump sum payment at retirement before a lump sum payment is approved by the trustees.

 

c) What are the tax implications on taking my retirement benefit in cash?

On retirement, the benefit will be taxed. Tax is calculated according to the following table which is applicable for the year of assessment ending 28 February 2014:

TAXABLE AMOUNT RATE OF TAX
R0 – R500 000 0%
R500 001 – R700 000 18% of the amount over R500 000
R700 001 – R1 050 000 R36 000 + 27% of the amount over R700 000
Amount exceeding R1 050 000 R130 500 + 36% of the amount over R1 050 000

 

 

 

d) What are the different types of annuities?

Fixed annuities

  • The insurance company sets the amount of pension you will receive every month, based on how much money you have to invest, and how long you are expected to live.
  • This pension must be paid for the rest of your life (and the life of your spouse, if you bought a pension for him/ her).
  • You will receive the same amount of pension every month, until you die, unless you purchase an escalating annuity.
  • This is the cheapest type of annuity, but inflation will eat away the spending power of your money, as you won’t receive increases on your monthly pension.
  • When you die, whatever is left in your investment goes back to the insurance company. The insurance company is taking the investment as well as mortality risk.

 

Inflation-linked annuities

  • These are similar to fixed annuities except that your pension will be increased every year by inflation.
  • This pension is a lot more expensive than a fixed annuity. This means that the same lump sum that you have to buy an annuity will buy you a lower pension than the fixed annuity.
  • The amount of your monthly pension will never go down.
  • If you live until you are 80/ 90, you will be better off with an inflation-linked annuity than with a fixed annuity.

 

“With-profit” or Escalating annuities:

  • This is similar to the Inflation-linked annuity, but is generally cheaper.
  • In contrast to an inflation-linked annuity, the increases you receive from a with-profit annuity are not based on inflation, but on how well the investments (in which your retirement capital is invested), performs.
  • This means that your increases can be higher than inflation for some years and lower than inflation in other years (and increases could be good one year and not so great the next year). Further, if investment markets give exceptionally poor returns for certain periods, there may be no increases at all, for that particular year.

 

Living annuity

  • This is called a “living annuity” because whatever capital is left in your annuity when you die, can be paid to your beneficiaries.
  • You can choose an income between 2,5% and 17,5% of your capital, every year. You can draw the minimum income of 2,5% if you have other sources of income and allow the rest of your capital to grow. On the other hand, if you have a financial crisis, you will be able to draw up to 17,5% of your capital.
  • The higher the income you draw, the shorter your capital will last. The length of time your capital lasts will also shorten if your investments do badly. If you live longer than you expected, your capital may not be sufficient. This means that, if you don’t have other sources of income, you could end up living off less and less money as years go by.

 

4. Investments

a) Where is my Share of Fund invested?

The default option for members is the Growth Portfolio. All members are automatically invested in this portfolio unless they make an election to the contrary.

The Conservative Portfolio was designed for Members who have reached age 55, or with less than 10 years to their intended retirement.

The Capital Protector Portfolio was designed for Members who have reached age 60, or with less than 5 years to their intended retirement.

The Shari’ah Portfolio was designed for those Members who subscribe to the laws of Shari’ah.

 

b) Can I change my portfolio?

Switches are allowed to and from any of the Portfolios on an annual basis at any time of the year. Only one switch per calendar year is allowed and multiple Portfolios are not permitted.