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English to Afrikaans: Addendum to the LPF Assessment Document General field: Law/Patents Detailed field: Medical: Health Care
Source text - English Table of Contents
INFORMATION ON THE PROVIDENT FUND (Retirement Benefit)
Appropriate contributions levels
Women working in the legal profession
How much money does a person need to retire?
Investment strategy
Resignation | retirement benefits
The Administrator (day-to-day)
Administration fees on provident fund
SUMMARY OF THE ADVANTAGES OF JOINING THE LPF
TABLES
Table 1: National Treasury’s discussion paper on Retirement Fund Reform, 2004
Table 2: Investment Solutions investment returns
INFORMATION ON THE PROVIDENT FUND (Retirement Benefit)
Appropriate contributions levels
The Legal Provident Fund is an arrangement set up by the legal profession to help make retirement provision for employees in the profession. As a general rule employees need to save 15% of their salary for 30 years or more to maintain their lifestyle on retirement. As many long-serving employees joining the LPF will have made no other provision for retirement, it is recommended that they also make additional provision outside the LPF to ensure an adequate amount set aside for retirement.
The contribution payable to the LPF’s provident fund is generally 10% of salary (5% employer and 5% employee). However, this may not be enough to have an adequate retirement and it is recommended that additional contributions are paid. Employees may also pay lump sum amounts into the provident fund. The final retirement benefit will depend on the contributions paid and the investment returns earned for the period of investment.
A 2009 Sanlam survey found that the average total retirement contribution made by the South African employee is 11.3 % of salary. The survey concluded that this percentage was not sufficient for those who started saving late. In fact few South Africans retire with sufficient resources to maintain their lifestyle after retirement unless they make a conscious effort to save enough during their employment years and preserve the benefits when they resign.
Women working in the legal profession
In 2008, the LSSA undertook an extensive survey* of the legal profession in South Africa. It was estimated that the attorneys’ practices employ approximately 39 000 support staff of which the largest group (44.3%) are secretaries and typists, the majority (85.9%) of these are women. This ties up with the Legal Provident Fund’s membership profile where the majority of employee member are female.
Although the LSSA’s study did not address retirement savings in legal profession, other studies show that women in particular are not be saving enough for retirement. One of the reasons for this is because women can experience career interruptions when starting families. The lack of retirement savings is especially grave when you consider that women outlive men by about seven years on average and should, therefore, be saving more during their working lives.
A significant percentage of women in South Africa are self-supporting. It is, therefore, critically important that women take their saving for retirement seriously.
* Survey: National Survey of the Attorneys’ Profession Report Prepared for the LSSA (Sep 2008)
INFORMATION ON THE PROVIDENT FUND (Retirement Benefit) continued
How much money does a person need to retire?
The Trustees like many other retirement fund trustees do not provide employees with projected values on retirement as these are based on guesswork that is unlikely to have any bearing on the true situation of the member. To help employees understand how much they will receive relative to their current income when they retire, they suggest that employees make use of replacement ratios.
To obtain the replacement ratio, the projected gross income after retirement is divided by the projected gross income prior to retirement (final salary). Replacement ratios are, therefore, used to determine the reasonableness of current retirement provision.
The table below was adapted from the National Treasury’s discussion paper on retirement fund reform. The table calculates the replacement ratio (potential percentage of final salary) to be paid to a employee after X number of years of saving assuming a net contribution rate of 10% of salary after and a real investment return of 4%.
Contribution years % of final salary paid to employee after retirement
15 years 15.0%
20 years 22.1%
25 years 30.6%
30 years 40.8%
35 years 53.0%
40 years 67.7%
45 years 85.3%
Table 1: National Treasury’s discussion paper on Retirement Fund Reform, 2004
The table highlights that it is necessary for people to save for most of their working lives in order to have enough money to retire. On joining the LPF, employees are able to track their replacement ratios on an interactive system.
What percentage of final salary is enough?
To maintain the same standard of living after retirement, it is not necessarily essential for the employee to have the same income as before retirement. It is generally predicted that most people will require around 75% of final salary after retirement. This is because when an employee retires, his/her financial needs change due to a decrease in age and work-related expenses such as housing and transport costs.
How to boost retirement income
What happens if an employee’s replacement ratio is too low? The simple answer is either to postpone retirement (with employer’s consent) or contribute more each month.
Investment strategy
The LPF offers a choice of investment portfolios to cater for the employees’ different ages and risk profiles. These portfolios are managed by Investment Solutions.
Investment Solutions Limited was established in 1997 and is a leading provider of multi-manager investment portfolios in the South African market.
A multi-manager effectively is a manager of investment managers. The single major difference between it and a single manager is that a multi-manager does not actually buy and sell shares, bonds etc. It manages the investment managers who do this. Investment Solutions' core business revolves around continually researching and monitoring investment managers, determining their strengths and/or weaknesses and their various investment styles. The research allows the blending of these managers in optimal portfolios, which is done through sophisticated systems and methods developed by the company
The LPF Trustees have carefully selected the following five Investment Solutions investment portfolios for employees:
• two market-related portfolios (Performer & Shari'ah - in compliance Islamic law);
• two conservative portfolios (Conserver and Real Return Focus); and
• One money-market portfolio (Banker).
Trustee Default Model
As many employees do not have the investment expertise to make a portfolio choice, the Trustee Default Model is available. It is based on the principle that the younger an employee is, the more he/she is able to take risks to increase the potential investment return. As the employee grows older, however, he/she has to become more and more careful with the investments so that the retirement fund savings are not negatively affected by major market fluctuations just before retirement.
This is not a “life stage” model where the employee’s money is automatically switched as he/she reaches the next age band. Switches in portfolios are managed by the employees.
Table 2: Investment Solutions investment returns
Resignation | retirement benefits
On resignation and retirement, an employee is entitled to 100% of Fund Credit. Fund Credit is made up as follows:
and
Resignation benefits options
i. The employee can withdraw the benefit in cash after paying tax.
ii. The employee can transfer the benefit tax-free to a provident preservation fund. The LPF has its own preservation fund through Alexander Forbes and a “seamless” transfer can be done.
iii. The employee can transfer the benefit to a retirement annuity, or new employer's pension or provident fund.
Retirement benefits options
Employees can retire from the LPF from 55 onwards. Normal retirement age is 65 but employees working past this age with the employer’s consent continue to contribute.
i. The employee can take the benefit as a cash lump sum after tax.
ii. The employee can convert all or part of the benefit into a monthly annuity/living annuity (pension) through any insurer of choice.
The Administrator (day-to-day)
In 2004, the LPF Trustees contracted Alexander Forbes Financial Services to perform the day-to-day administration functions of the LPF. This was after an in-depth investigation into retirement fund administrators in the South African market.
Alexander Forbes is a leading provider of financial and risk services internationally. The primary operations are based in South Africa, the rest of Africa, UK and Europe.
In 2009, Alexander Forbes won the 2009 PMR Golden Arrow Awards for being rated first overall in the “Employee Benefits Administration & Consulting Firms” category.
Administration fees on the provident fund (retirement benefit)
There are two administration fees payable, i.e. one to the Administrator (Alexander Forbes) and one to cover Fund expenses.
i. Fee charged by the Administrator for the day-today administration
Contributions: 5% employer | 5% employee or 10% employer
Alexander Forbes charges an administration fee of 0,512% of Fund salary to administer the provident fund. This fee is subject to a cap of R 120.00 (VAT inclusive) per employee per month. This means that the most an employee will pay is R 120.00 per month.
Contributions: 5% employer | 0% employee
When the employer’s contribution is 5% and the employee does not contribute, the administration fee is still 0.512% of salary, but the cap is reduced to R 35.00 (VAT inclusive). The fees compare favourably with the fee charged by other administrators of funds (see Sanlam Survey below).
Sanlam Employee Benefits 2009 Benchmark Survey
According to the survey, the average cost of an administration fee (excluding asset management fees and commission) is 1.3 percent of payroll. This confirms that the administration fees charged by the Legal Provident Fund compares favourably with the average and no broker commissions are paid.
ii. Fee charged by Legal Provident Fund
The LPF must pay other expenses such as audit fees, bank fees, levies, trustee meeting expenses and marketing fees. This fee amounts to R7.00 (VAT inclusive) per employee, per month which is deducted from the employee’s Fund Credits.
SUMMARY OF THE ADVANTAGES OF JOINING THE LPF
The Trustees are respected attorneys, advocates and professionals.
The administration fees are generally far cheaper than a single legal firm would be able to negotiate.
There are no broker commissions payable.
There is a flexible approach to tailor benefits and investments to suit individual employee needs.
There are 500 participating legal firms including the Law Society of South Africa, the statutory law societies, the Attorneys Fidelity Fund.
The contributions and life cover premiums are tax deductible for the employer.
The administration is done on a state-of-the-art, award-winning system.
Employees and employers can look up values on an interactive website.
All legal firms irrespective of size can join and each is registered and managed independently.
Translation - Afrikaans
Inhoudsopgawe
INLIGTING RONDOM DIE VOORSORGFONDS (Aftrede-voordeel)
Tersaaklike bydrae-vlakke
Vroue werksaam in die regsprofessie
Hoeveel geld het ‘n persoon nodig om af te tree?
Beleggingstrategie
Bedankings- en Aftrede-voordele
Die Administrateur (Dag-tot-dag)
Administrasiefooie van die voorsorgfonds
OPSOMMING VAN DIE VOORDELE RONDOM DIE AANSLUITING BY DIE RVF
TABELLE
Tabel 1: Nasionale Tesourie se Diskussiedokument op Afredefondshervorming, 2004
Tabel 2: Beleggingsoplossings en beleggingsuitkere
INLIGTING RONDOM DIE VOORSORGFONDS (Aftrede-voordeel)
Tersaaklike bydrae-vlakke
Die Regsvoorsieningsfonds is ‘n inisiatief gestig deur die regsprofessie om werknemers in die professie te help met aftrede-voorsiening.
As algemene reël behoort werknemers sowat 15% van hul salaris vir sowat 30 jaar of langer te spaar om hul lewenstyl te kan volhou met aftrede. Aangesien baie werknemers wat reeds lank in diens is, by die RVF sal aansluit, word dit aanbeveel dat hierdie persone ook addisionele voorsorg buite die RVF sal maak om te verseker dat hul ‘n groot genoeg bedrag gespaar het ten tyde van aftrede.
Die bydrae betaalbaar aan die RVF se voorsorgfonds is oor die algemeen 10% van die salaris (5% vanaf die werkgewer en 5% vanaf die werknemer). Dit mag egter nie genoegsaam wees om ‘n gerieflike aftrede te verseker nie, en addisionele bydraes word aanbeveel. Wernemers kan ook ‘n lompsom in die voorsorgfonds inbetaal. Die finale aftrede-voordeel sal afhang van die bydraes wat betaal is en die beleggingsuitkere wat tydens die beleggingsperiode verdien is.
‘n Opname wat in 2009 deur Sanlam gedoen is, het bevind dat die gemiddelde totale aftrede-bydrae deur die Suid-Afrikaanse werknemer sowat 13% van sy/haar salaris beloop. Die opname het verder bevind dat hierdie persentasie nie genoegsaam is vir diegene wat op ‘n latere tydstip in hul lewe begin spaar nie. Die feit van die saak is dat baie min Suid-Afrikaners aftree met genoegsame fondse om hul lewenstyl voort te sit na aftrede, indien hul nie ‘n daadwerklike poging aanwend om genoegsaam te spaar gedurende die jare wat hul werk en die voordele behou na aftrede nie.
Vroue werksaam in die regsprofessie
In 2008, het die LSSA ‘n uitgebreide opname* van die regsprofessie in Suid-Afrika gedoen.
Daar is bereken dat prokureurspraktyke sowat 39 000 ondersteuningspersoneellede in diens het, waarvan die grootste groep (44,3%) sekretaresses en tiksters is (85,9%) en dat die meerderheid van hierdie werknemers vroue is.
Hoewel die LSSA se studie nie aftrede-spaargeld in die regsprofessie aangespreek het nie, het ander studies gewys dat veral vroue nie genoegsaam spaar vir aftrede nie. Een van die redes hiervoor is dat vroue werksonderbrekings ondervind wanneer hul met ‘n gesin begin.
Die tekort aan aftrede-spaargeld is spesifiek ernstig wanneer ‘n mens in ag neem dat vroue oor die algemeen sowat sewe jaar ouer as mans word, en dat hul daarom dus meer behoort te spaar gedurende hul leeftyd.
‘n Beduidenswaardige persentasie vroue in Suid-Afrika is self-versorgend. Dit is daarom van die uiterste belang dat vroue ‘n spaarplan vir aftrede in ‘n ernstige lig beskou.
• Opname: Nasionale opname van die Prokureursprofessie – Verslagf voorberei vir die LSSA (Sept 2008)
INLIGTING RONDOM DIE VOORSORGFONDS (Aftrede-voordeel) vervolg
Hoeveel geld het ‘n persoon nodig om af te tree?
Die trustees, net soos baie ander aftredefonds-trustees, bied nie aan die werknemers geprojekteerde waardes op aftrede nie aangesien dié gebasseer is op raaiwerk wat nie noodwendig enige betrekking het op die ware situasie van die lid nie.
Om werknemers te help bepaal hoeveel hul sal ontvang met aftrede, in vergelyking tot hul huidige inkomste, word aanbeveel dat werknemers gebruik maak van vervangingsratios’s.
Om die vervangingsratio te verkry, word die geprojekteerde bruto inkomste na aftrede gedeel deur die geprojekteerde bruto inkomste voor aftrede (finale salaris). Vervaningsratio’s word dus gebruik om die billikheid van die huidige aftrede-voorsorg te bepaal.
Die onderstaande tabel is geneem van die Nasionale Tesourie se Diskussiedokument op aftrede-fondshervorming. Hierdie tabel bereken die vervangingsratio (potensiële persentasie van die finale salaris) wat uitbetaal moet word aan ‘n werknemer na X-aantal jare van spaar, indien veronderstel word dat ‘n netto bydrae van 10% van die salaris en ‘n ware uitkeerbedrag van 4% ter sprake is.
Jare van bydraes % van finale salaris wat aan die werknemer na aftrede betaal word.
15 jaar 15.0%
20 jaar 22.1%
25 jaar 30.6%
30 jaar 40.8%
35 jaar 53.0%
40 jaar 67.7%
45 jaar 85.3%
Tabel 1: Nasionale Tesourie se Diskussiedokumnet op Afrede-fondshervorming, 2004
Hierdie tabel lig die feit uit dat dit noodsaaklik is om die grootste gedeelte van ‘n mens se werkende lewe te spaar sodat ‘n mens genoeg geld het om at te tree. Deur by die RVF aan te sluit, is werknemers in staat om hul vervangingsratio’s op ‘n interaktiewe stelsel te volg.
Watter persentasie van die finale salaris is genoeg?
Om dieselfde lewenstandaard te behou na aftrede, is dit nie noodwendig nodig vir die werknemer om dieselfde inkomste te verdien as voor aftrede nie. Dit word algemeen voorspel dat die meeste mense rondom 75% van hul finale salaris nodig sal hê na aftrede. Dit is so omdat die persoon se finansiële behoeftes na aftrede verander as gevolg van sy/haar ouderdom en werkverwante uitgawes soos byvoorbeeld vervoerkoste.
Hoe om inkomste na aftrede te verhoog
Wat gebeur wanneer die werknemer se vervangingsratio te laag is? Die eenvoudige antwoord is om aftrede uit te stel (met die werkgewer se toestemming) of om die maandelikse bydrae te verhoog.
Beleggingstrategie
Die RVF bide ‘n kuese van beleggingsportefeuljes aan om te voorsien in die werknemer se verskillende ouderdoms- en risikoprofiele. Hierdie portefeuljes word bestuur deur Investment Solutions.
Investment Solutions Limited is in 1997 gestig en is ‘n leier op die gebied van multi-bestuurs-beleggingsportefeuljes in die Suid-Afrikaanse mark
‘n Multi-bestuurder is effektief die bestuurder van beleggingsbestuurders. Die enkele groot verskil tussen ‘n multi-bestuurder en enkelbestuurder is dat ‘n multi-bestuurder nie aktief aandele, verbande ens koop en verkoop nie maar die beleggingsbestuurders wat dit wel doen, bestuur.
Investment Solutions se hoofbesigheid draai rondom die voortgesette navorsing en monitering van beleggingsbestuurders, en om hul sterk punte en swak punte en verskillende beleggingstyle te bepaal. Die navorsing laat die vermenging van hierdie bestuurders in optimale portefeuljes toe, wat gedoen word deur gesofistikeerde stelsels en metodes wat ontwikkel is deur die maatskappy.
Die Trustees van die RVF het die volgende vyf Investment Solutions beleggingsportefeuljes gekies vir werknemers:
• Twee markverwante portefeuljes (Performer & Shari'ah - in nakoming van die Islamwetgewing);
• Twee konserwatiewe portefeuljes (Conserver en Real Return Focus); en
• Een geldmarkportefeulje (Banker).
Trustee Verbruikersmodel
Aangesien baie werknemers nie die beleggingskennis he tom ‘n ingeligte portefeulje-keuse te maak nie, is die Trustee Verbruikersmodel beskikbaar. Dit is gebaseer op die beginsel dat hoe jonger die werkners is, hoe meer is hy/sy in staat om risiko’s te neem om die potensiaal van die beleggingsuitkeer te verhoog.
Namate die werknemer egter ouer word, moet hy/sy versigtiger beplan en kyk na die beleggings sodat die aftrede-spaargeld nie negatief beïnvloed word deur markfluktuering net voor aftrede nie.
Hierdie is nie ‘n “lewens-stadium-model” waar die werknemer se geld outomaties oorgeskakel word wanneer hy/sy die volgende ouderdomsgroep bereik nie. Oorskakeling in portefeuljes word deur die werknemers self bestuur.
Tabel 2: Investment Solutions se beleggings-uitkeerwaardes
Bedankings- en Aftrede-voordele
By bedanking en aftrede, is ‘n werknemer geregtig op 100% van die Fondskrediet. Die Fondskrediet word as volg bereken:
and
Voordele-opsies by bedanking
i. Die werknemer kan die voordeel in kontant trek na die betaling van belasting
ii. Die werknemer kan die voordeel belastingvry oorplaas na ‘n voorsorghandhawingsfonds. Die RVF het sy eie handhawingsfonds, onderskryf deur Alexander Forbes/ en ‘n moeitevrye oorplasing kan gedoen word.
iii. Die werknemer kan die voordeel oorplaas na ‘n aftrede –annuïteitfonds, of nuwe werknemerspensioen of voorsorgfonds.
Voordele-opsies by aftrede
Werknemers kan vanaf die ouderdom van 55 van die RVF bedank. Die normale aftrede-ouderdom is 65 maar werknemers wat met hul werkgewer se toestemming aanhou werk, hou aan om die maandelikse paaiement te betaal.
i. Die werknemer kan die voordeel in kontant trek na die betaling van belasting
ii. Die werknermer kan die hele bedrag of net ‘n deel daarvan oorplaas na ‘n maandelikse annuïteitfonds of lewensannuïteitfonds (pensioen) deur enige versekeraar van sy/haar keuse.
The Administrator (dag-tot-dag)
In 2004, het die RVF trustees Alexander Forbes Financial Services inkontrakteer om die dag-tot-dag administrasiedunksie van die RVF te administreer. of the LPF. Dit het gevolg op ‘n in-diepte ondersoek na aftrede-fonds administrateurs in die Suid-Afrikaanse mark.
Alexander Forbes is ‘n internasionale leier op die gebied van die aanbod van finansiële en risiko-dienste en hul primêre besigheid is gebaseer in Suid-Afrika, die res van Afrika, die Verenigde Koninkryke en Europa.
IN 2009 het Alexander Forbes die 2009 PMR Golden Arrow Toekennning gewen deur eerste gekeur te word in die kategorie “Employee Benefits Administration & Consulting Firms”
Administrasiefooie op die voorsorgfonds (aftrede-voordele)
Twee administrasiefooie is betaalbaar naamlik aan die Administrateur (Alexander Forbes) en om die fondsuitgaweste dek.
i. Fooi aan die Administrateur vir die dag-tot-dag adnministrasie.
Bydraes: 5% deur die werkgewer | 5% deur die werknemer of 10% deur die werkgewer,
Alexander Forbes hef ‘n administrasiefooi van 0,512% van die fonds-salaris om die voorsorgfonds te administreer. Hierdie fooi is onderworpe aan ‘n plafon van R 120.00 (insluitend BTW) per werknemer per maand. Dit beteken dat die meeste wat die werknemer per maand sal betaal, R120 is.
Vydraes: 5% werkgewer | 0% werknemer
Wanneer die werkgewer se bydrae 5% is en die werknemer glad nie bydra nie, is die administrasiefooi steeds 0.512% van die salaris maar die plafon is verminder tot R 35.00 (insluitend BTW). Hierdie fooie vergelyk gunstig met fooie wat deur ander administrateurs van fondse gehef word (Sien die Sanlam-ondeeoek hieronder)
Sanlam Werknemersvoordele 2009 Nismarkopname
Volgens hierdie opname is die gemiddelde koste van ‘n administrasiefooi (uitsluitend bate-bestuurfooie en kommissie) 1,3 persent van die salarislys. Dit bevestig dat die administrasiefooie soos gehef deur die Regsvoorsieningsvonds gunstig vergelyk met die gemiddelde. Verder word geen kommissies betaal nie.
ii. Die Regsvoorsieningsfonds se fooie
Die RVF moet ander uitgawes dek soos byvoorbeeld auditfooie, bankkostes, heffings, trustee-vergaderingskostes en bemarkingskostes. Hierdie fooi beloop R7 (insluitend BTW) per werknemer per maand wat van die werknemers se fondskrediet verhaal word.
OPSOMMING VAN DIE VOORDELE RONDOM DIE AANSLUITING BY DIE RVF
Die trustees is gerespekteerde prokureurs, advocate en professionele persone.
Die administrasiefooie is oor die algemeen heelwat goedkoper as wat ‘n enkele regsfirma sou kon beding.
Daar is geen makelaarkommissie betaalbaar nie.
Daar is ‘n buigsame benadering om voordele en beleggings te skep om in elke individuele werknemer se behoeftes te voorsien.
Daar is 500 deelnemende regsfirma’s insluitend die Law Society of South Africa, (Regsvereniging van Suid-Afrika?), die statutêre regsverenigings en die Prokureurs Waarborgsversekering
Bydraes en lewensdekking-premies is belastingaftrekbaar vir die werkgewer.
Administrasie word gedoen op ‘n moderne, ongeëwenaarde stelsel.
Werknemers en werkgewers kan waardes opsoek en volg op ‘n interaktiewe webtuiste
Alle regsfirma’s, ongeag grootte, kan aansluit en elkeen word onafhanklik geregistreer en bestuur
English to Afrikaans: Legal Provident Fund Quotation Document General field: Medical Detailed field: Law (general)
Source text - English The Trustees of the Legal Provident Fund would like to thank you for making available the employees’ and directors’ personal data. I have pleasure in attaching an assessment of the costs and benefits for your law firm to join the legal profession’s fund.
The Trustees have carefully put together the three benefits and have negotiated low administration fees and premiums. They believe that the Legal Provident Fund is the best retirement fund model for the legal profession in terms of inter alia the LPF’s sound governance, administration, investments and its low costs. Please read the important points on page 3 before considering the assessment.
This document is quite comprehensive in order to cover all the benefits. Please do not hesitate to contact me if you have any questions or would like to set up an appointment to see me.
Please read these important points before considering the assessment.
1. The Legal Provident Fund offers a provident fund (retirement benefit), life cover and disability cover to employees, partners and directors of law firms.
2. The provident fund and life cover go hand-in-hand and the disability cover is optional. For this reason the premiums for the disability benefit are reflected in a separate section.
3. The employer (law firm) is required to contribute to the provident fund on behalf of the employees (includes directors) at a minimum rate of 5% of Fund salary. The employer is also required to pay the premiums for the life cover benefit and disability benefit (if taken up).
4. When an employer joins the LPF, the existing employees can choose whether or not to join. All new employees who are hired after the firm has joined the LPF are required to join within 12 months of their appointment. This provision excludes short-term employees such as candidate attorneys.
5. This assessment is not intended to be the kind of detailed financial advice described in the Financial Advisory and Intermediary Services Act, 37 of 2002. Where choice is allowed, it is advised that expert financial advice is sort before making a decision.
6. Partners
Previously partners were not able to contribute to the provident fund. However, the Income Tax Act was recently amended to provide that a partner of a partnership be considered an “employee” of the partnership.
Membership by each partner is optional. The basis for the partner’s contribution is 5% or 10% of all or part of his income from the partnership in the form of his share of profits. Partners’ risk benefits are also flexible and the partners can nominate the life cover amount and disability salary. The contributions and premiums are paid post tax to the provident fund.
Partners
In this assessment, the partner contributes to the provident fund at 5% of Fund salary on a post-tax basis.
A initiative since 1967 Confidential
Table of Contents Page
FOR THE EMPLOYEES (INCLUDES DIRECTORS)
Employer’s contributions to the provident fund and premiums for life cover
Employees’ personal monthly contributions to the provident fund
Disability benefit – optional per employer (law firm)
NOTES TO THE ASSESSMENT DOCUMENT
HOW TO JOIN THE LEGAL PROVIDENT FUND
TABLES
Table 1: summary of contributions and life cover premiums payable by the employer
Table 2: Employees - disability salaries and premiums
Addendum to the LPF Assessment Document (separate document)
INFORMATION ON THE PROVIDENT FUND (Retirement Benefit)
Appropriate contributions levels
Women working in the legal profession
How much money does a person need to retire?
Investment strategy
Resignation/retirement benefits
The Administrator (day-to-day)
Administration fees on provident fund
SUMMARY OF THE ADVANTAGES OF JOINING THE LPF
TABLES
Table 1: National Treasury’s discussion paper on Retirement Fund Reform, 2004
Table 2: Investment Solutions investment returns
TERMS
1. The term “employer” refers to the law firm which can be a company, partnership, or sole proprietor.
2. The term “employee(s)” refers to employees of law firms/advocates’ groups. It can also refer to partners of partnerships and directors of incorporated practice as they are deemed to be employees for retirement fund purposes.
FOR EMPLOYEES (INCLUDES DIRECTORS)
Employers’ contributions to the provident fund and premiums for life cover
Benefit 1 Benefit 2 = Total
Employees’ names (includes directors) Age Fund salary monthly (can be nominated) Provident fund contribution: 5% of salary Life cover premium for 2X annual Fund salary Total per employee for the two benefits
Table 1 - summary of contributions and life cover premiums payable by the employer (law firm)
NOTES ON THE PROVIDENT FUND AND LIFE COVER
i. Provident Fund contributions
― In this assessment, the employer (law firm) contributes to the provident fund at 5% of Fund salary on behalf of each employee.
― The employer contributions to the provident fund are tax deductible.
― The percentage of salary which is tax deductible is subject to the limitations in the Income Tax Act which states that they should not exceed 10% of an employee’s salary, but in practice up to 20% is allowed.
ii. Life cover benefit
Underwriter: Momentum
It is important that employees joining the Legal Provident Fund are covered immediately for life cover in the event that they pass away unexpectedly. The life cover and provident fund amounts will then be paid to the late employee’s dependants/beneficiaries.
― The premiums for the life cover benefits (Benefit 2) are shown separately from the 5% provident fund contribution.
― The premium is determined by each employee’s age, sex and amount of cover. The premium calculation date of the cover on this assessment is 31 May 2010.
― The life cover plus any provident fund benefit is paid to the late employee’s dependants/ beneficiaries.
― There is a pre-existing condition policy clause which states that no death benefit is payable during the first 12 months following a new member’s entry date if, in the opinion of the insurer, the death occurred as a result of a condition which the member knew about or was diagnosed with, within the 6 months prior to the entry date. Please refer to the policy document for more information.
― Additional benefits provided
On resignation or retirement (age 65) the employee can take out an individual whole life policy for the same amount of cover with the underwriter (Continuation Option). The underwriter’s individual premiums will apply.
The life cover is in place for the employee until a maximum age of 70 whilst he/she remains a member of the LPF. Thereafter it falls away with no surrender value.
Employees’ optional personal monthly contributions to the provident fund
i. Each employee contributes to the provident fund at a rate of 5% of Fund salary. Employees can also contribute at a rate of 0% (no contribution).
ii. The LPF Trustees recommended that employees pay at least 5% to the provident fund, in addition to the employer contribution, as the more they save the greater the final retirement benefit will be.
iii. The employees contribute on an after-tax basis. Consequently, when an employee resigns from employment, his/her own contributions are paid out tax-free.
iv. Additional voluntary contributions can also be paid by employees. There is no limit to these additional contributions and no fees are levied.
FOR EMPLOYEES (continued)
Disability benefit – optional per employer (law firm)
Underwriter: Momentum
Although the employer can decide whether or not to take this benefit on behalf of his/her employees, it is nonetheless an important benefit as it is designed to replace 75% of the disabled employee’s income until recovery, retirement or death.
Names of employees Date of birth M/F Monthly disability salary – 75% is paid
Maximum R26,667.00 Monthly premium for the disability benefit
Table 2: Employees - disability salaries and premiums
Cover
i. The premium for the disability cover is 1.225% of disability salary.
ii. The disability cover continues until a maximum age of 65. Thereafter, it falls away with no surrender value. There is no continuation option.
Benefits paid on claim
iii. The disability benefit is paid if the employee becomes totally disabled and unable to continue with his/her occupation whether this is temporary or permanent.
iv. The benefit to be paid is 75% of the employee’s disability salary and the first payment is made after the three-month waiting period.
v. The benefit is paid until the employee’s recovery, death or retirement.
vi. There is a pre-existing condition policy clause which states that no benefit is payable during the first 12 months following a new employee’s entry date if the employee was disabled as a result of any injury, illness or condition within the 12 months prior to the entry date.
vii. Additional benefits provided
― The benefit escalates annually. The escalation rate is limited to a maximum of the increase in the Consumer Price Index over the preceding year.
― The employee’s provident fund benefit continues as the insurer pays the employer’s contribution of 5% of Fund salary, up to the policy maximum.
NOTES TO THE ASSESSMENT DOCUMENT
Note 1
The premiums for the risk benefits (life and disability cover) are paid separately by participating employers. The reason for this is so that the employee can calculate the Rand amount going towards retirement provision.
Note 2
To make the benefits easier to understand the detail has been simplified in this letter. The assessment does not supersede the Rules of the LPF or the insurer’s policies. In the event of there being a discrepancy, the Rules or policies will prevail.
Note 3
This assessment is not intended to be the kind of detailed financial advice described in the Financial Advisory and Intermediary Services Act, 37 of 2002. Where choice is allowed, employees are advised to seek expert financial advice before making any decision.
Note 4
Important: When an employer joins the LPF, the existing employees can choose whether or not to join. After an employer has joined, however, new employees are required to join the LPF within 12 months of their appointment. This provision excludes short-term employees such as candidate attorneys.
HOW TO JOIN THE LEGAL PROVIDENT FUND
For the employer to join the Legal Provident Fund, the following forms need to be completed:
Employer forms – 3 forms
Application for membership form.
Authorised signatories form.
Debit order form
Employee forms – 2 forms
Employee registration form
Nomination of beneficiary form.
To join in a month, the forms should be returned by the 8th of that month, i.e. 8 November for 1 November. The employees will then be covered from 1 November.
Please contact Ros Elphick (Tel: 012 997 1390 | Email: [email protected])
if you would like the forms to be sent to you.
“Join 500 other law firms/advocates’ groups in the Legal Provident Fund
to strengthen its position as the best retirement fund option
for the legal profession and its employees.”
Translation - Afrikaans Die Trustees van die Regsvoorsieningsfonds wil u hiermee bedank dat u u werknemers en direkteure se persoonlike data aan ons beskikbaar stel. Dit is vir my aangenaam om ‘n koste- en voordele-beraming hierby aan te heg sodat u regsfirma by die Regsvoorsieningsfonds kan aansluit.
Die drie voordele is met groot sorg deur die trustees opgestel en daar is onderhandel vir lae administrasiefooie en paaiemente. Die trustees glo die Regsvoorsieningsfonds is die beste aftrede-fondsmodel vir die regsprofessie betreffende inter alia die RVF se gesonde beheermaatreëls, administrasie, beleggings en lae koste. Lees asseblief die belangrike punte op bladsy 3 deeglik deur voordat u ‘n besluit neem.
Hierdie dokument is redelik lywig en omvattend om die voordele so deeglik moontlik te kan omskryf. Moet asseblief nie huiwer om my te kontak indien u enige vrae het of ‘n afspraak wil maak om my te ontmoet nie.
Lees asseblief hierdie belangrike punte voordat u ‘n besluit neem.
1. Die Regsvoorsieningsfonds bied ‘n voorsorgfonds (aftrede-voordeel), lewensdekking en ongeskiktheidsvoordeel aan werknemers, vennote en direkteure van regsfirma’s
2. Die voorsorgfonds en lewensdekking gaan hand aan hand en die ongeskiktheidsvoordeel is opsioneel. Om hierdie rede word die paaiemente vir die ongeskiktheidsvoordeel in ‘n aparte afdeling bespreek.
3. Daar word van die werkgewer (regsfirma) verwag om by te dra tot die voorsorgfonds namens die werknemers (insluitend die direkteure) teen ‘n minimum van 5% van die fonds-salaris. Daar word ook verder van die werkgewer verwag om die premies vir die lewensdekking en ongeskiktheidsvoordeel te betaal (indien dit geneem word)
4. Wanneer ‘n werkgewer besluit om by die RVF aan te sluit, kan die werknemers self besluit of hul wil aansluit, al dan nie. Daar word egter van allle nuwe werknemers wat aangestel word nadat die firma by die RVF aangesluit het, verwag om binne twaalf maande vanaf datum van aanstelling, by die RVF aan te sluit. Hierdie voorsorg sluit korttermynwerknemers soos kandidaat-advokate uit.
5. Hierdie beraming is nie bedoel om die soort gedetailleerde finansiële raad te wees soos omskryf in die Finansiële en Bemiddelende Dienstewet, 37 van 2002 nie. Wanneer keuses toegelaat word, word dit aanbeveel dat spesialis-finansiële raad verkry word voordat ‘n besluit geneem word.
6. Vennote
Vennote is voorheen nie toegelaat om by te dra tot die voorsorgfonds nie. Die Inkomstebelastingwet is egter onlangs sodanig aangepas dat ‘n vennoot in ‘n vennootskap as ‘n “werknemer” van die vennootskap beskou kan word.
Lidmaatskap van elke vennoot is opsioneel. Die basis van die vennoot se bydrae is 5% tot 10% van ‘n deel, of sy hele inkomste van die vennootskap, in die vorm van sy winsdeling. Vennote se risiko-voordele is ook buigsaam en die vennote kan self hul lewensdekkingbedrag en ongeskiktheidsalaris beplaal.
Die bydraes en premies word post-belasting aan die voorsorgfonds betaal.
Vennote
In hierdie beraming dra die vennoot by teen 5% van die fonds-salaris op ‘n post-belastingbasis.
A inisiatief sedert 1967 Vertroulik
Inhoudsopgawe Bladsy
VIR DIE WERKNEMERS (INSLUITEND DIREKTEURE)
Werkgewer se bydrae tot die voorsorgfonds en premies vir lewensdekking
Werknemers se persoonlike maandelikse bydraes aan die voorsorgfonds
Ongeskiktheidsvoordeel – opsioneel vir elke werkgewer (regsfirma)
NOTAS TOT DIE ASSESSERINGSDOKUMENT
HOE OM BY DIE REGSVOORSIENINGSFONDS AAN TE SLUIT
TABELLE
Tabel 1: Opsomming van die bydraes en lewensdekkingpremies betaalbaar deur die werkgewer
Tabel 2: Werknemers – opngeskiktheids-salarisse en premies
Bylae tot die RVF se Asseringsdokument (aparte dokument)
INLIGTING RONDOM DIE VOORSORGFONDS (Aftrede-voordeel)
Tersaaklike bydrae-vlakke
Vroue werksaam in die regsprofessie
Hoeveel geld het ‘n persoon nodig om af te tree?
Beleggingstrategie
Bedankings- en Aftrede-voordele
Die Administrateur (Dag-tot-dag)
Administrasiefooie van die voorsorgfonds
OPSOMMING VAN DIE VOORDELE RONDOM DIE AANSLUITING BY DIE RVF
TABELLE
Tabel 1: Nasionale Tesourie se diskussiedokument op Aftrede-fondshervorming, 2004
Tabel 2: Beleggingsoplossings en belegginsuitkere
TERMINOLOGIE
1. Die term “werkgewer” verwys na die regsfirma, wat ‘n maatskappy, vennootskap of alleeneienaar kan wees.
2. Die term “werknemer(s)” verwys na werknemers van regsfirma’s/advokaatgroepe. Dit kan ook verwys na ‘n vennoot of vennootskappe en direkteure van ingelyfde praktyke aangesien hul vir die doeleindes van aftreefondse beskou word as werknemers.
3.
VIR WERKNEMERS (INSLUITEND DIREKTEURE)
Bydraes van die werknemers aan die voorsorgfonds en premies vir lewensdekking
Voordeel 1 Voordeel 2 = Totaal
Name van werknemers (insluitend direkteurs)
Ouderdom Maande-likse fonds-salaris (kan bepaal word)
Voorsorg-
fondsbydrae 5% van salaris Lewensdekkingpremie teen 2X die jaarlikse salaries
Totaal per werk-nemer vir die twee voordele
Tabel 1 – Opsomming van die bydraes en lewensdekkingpremies betaalbaar deur die werkgewer (regsfirma)
NOTAS RAKENDE DIE VOORSORGFONDS EN LEWENSDEKKING
i. Voorsorgfondsbydraes
― In hierdie beraming dra die die werkgewer (die regsfirma) 5% van die fonds-salaris aan die voorsorgfonds namens elke werknemer by.
― Die werkgewer se bydrae tot die voorsorgfonds is belastingaftrekbaar.
― Die persentasie van die salaris wat belastingaftrekbaar is, is onderhewig aan die beperkinge in die inkomstebelastingwet wat aandui dat dit nie meer as 10% van die werknemer se salaris mag beloop nie, maar in die praktyk word tot 20% toegelaat.
ii. Lewensdekkingvoordeel
Onderskrywer: Momentum
Dit is belangrik dat werknemers wat aansluit by die Resgvoorsieningsfonds onmiddellike dekking geniet indien hul dalk onverwags tot sterwe kom. Die lewensdekking- en voorsorgfondsbedrae sal dan uitbetaal word aan die werknemer wat gesterf het, se afhanklikes / begunstigdes.
― Die premies vir die lewensdekkingvoordeel (Voordeel 2) word apart gewys van die 5% voorsorgfondsbydrae.
― Hierdie premie word bepaal deur elke werknemer se ouderdom, geslag en dekkingsbedrag. Die premie-berekeningsdatum op die voorblad van hierdie beraming is soos op 31 Mei 2010.
― Die lewensdekking plus enige voorsorgfondsvoodeel word betaal aan die afhanklikes of begunstigdes van die werknemer, indien hy/sy tot sterwe kom.
― Daar is ‘n voorafbestaande voorwaarde-klousule in die polis wat bepaal dat geen doodsvoordeel betaalbaar is gedurende die eerste 12 maande vanaf die aansluitdatum van ‘n nuwe lid, indien die versekeraar van mening is dat die dood veroorsaak is deur ‘n siekte-toestand waarvan die lid bewus was, of mee diagnorseer is in die 6 maande voor die intreedatum.
― Sien asseblief die polisdokument vir enige nadere inligting.
― Bykomende voordele wat aangebied word:
Met bedanking of aftrede (op die ouderdom van 65) kan die werknemer ‘n individuele hele-lewe-polis uitneem vir dieselfde dekkingsbedrag deur die onderskrywer (Voortsettingsopsie) Hier sal die onderskrywer se individuele premies van toepassing wees.
Die lewensdekking geld vir die werknemer tot die maksimum ouerdom van 70 jaar terwyl hy/sy lid van die RVF is. Daarna val dit weg sonder enige uitkeerwaarde.
Werknemers se opsionele maandelikse bydraes tot die voorsorgfonds
i. Werknemers dra by tot die voorsorgfonds deur 5% van die fonds-salaris per maand te betaal. Werknemers kan ook 0% betaal (geen bydrae)
ii. Die trustees van die RVF beveel aan dat werknemers ten minste 5% aan die voorsorgfonds betaal, bykomend tot die werkgewer se bydrae, omdat die finale aftrede-voordeel groter is, hoe meer ‘n persoon spaar.
iii. Die werknemers dra by op ‘n na-belasting-basis. Wanneer ‘n werknemer gevolglik bedank, word sy/haar eie bydraes belastingvry uitbetaal.
iv. Bykomende vrywillige bydraes kan ook deur werknemers betaal word. Daar is geen limiet op hierdie bykomende bydraes nie en geen fooie betaalbaar nie.
VIR WERKNEMERS (vervolg)
Ongeskiktheidsvoordeel– opsioneel vir die werkgewer (regsfirma)
Onderskrywer: Momentum
Hoewel die werkgewer kan besluit of hy/sy hierdie voordeel wil neem namens sy/haar werknemers, is dit egter steeds ‘n belangrike voordeel wat ontwerp is om 75% van die ongeskikte werknemer se salaris te vervang totdat die werknemer herstel, aftree of sterf.
Name van die werknemers Geboorte-datum M/V Maandelikse ongeskikt-heidsalaris van 75% word betaal met die maksimum op R26,667.00 per maand Maandelikse premie vir die ongeskiktheids-voordeel
Tabel 2: Werknemers – ongeskiktheidsalaris en premies
Dekking
i. Die premie vir die ongeskiktheidsvoordeel is 1.225% van die ongeskiktheidsalaris
ii. Die ongeskiktheidsvoordeel is van toepassing tot op die maksimum ouderdom van 65 waarna dit wegval met geen uitkeerwaarde. Daar is geen voortsettingsopsie nie.
Voordele wat betaal word in die geval van ‘n eis
iii. Die ongeskiktheidsvoordeel word uitbetaal wanneer die werknemer heeltemal ongeskik verklaar word vir werk en dus nie in staat is om voort te gaan met sy/haar beroep nie, ongeag of dit tyedelik of permanent is
iv. Die voordeel word betaal teen 75% van die werknemer se ongeskiktheidsalaris en die eerste paaiement is betaalbaar na die drie-maande wagperiode.
v. Hierdie voordeel word maandeliks uitbetaal tot die werknemers se herstel, dood of aftrede.
vi. Daar is ‘n voorafbestaande voorwaarde-klousule in die polis wat bepaal dat geen voordeel betaalbaar is gedurende die eerste 12 maande vanaf die aansluitdatum van ‘n nuwe lid, indien die werknemer ongeskik verklaar is as gevolg van ‘n besering, siekte of toestand in die 12 maande voor die intreedatum.
vii. Addisionele voordele gebied
― Hierdie voordeel ekskaleer jaarliks. Die eskalasie-skaal is beperk tot ‘n maksimum van die Verbruikersprysindeks oor die vorige jaar.
― Die werknemer se voorsorgfondsvoordeel word voortgesit indien die versekeraar die werkgewer se bydraes van 5% van die fonds-salaris betaal, tot op polis-maksimum.
BYKOMENDE NOTA’S TOT DIE ASSESSERINGSDOKUMENT
Nota 1
Die premies vir die risiko-voordele (lewens- en ongeskiktheidsvoordele) word apart betaal deur deelnemende werkgewers. Die rede hiervoor is sodat die werknemer die randwaarde kan vereken ten opsigte van aftrede-voorsiening.
Nota 2
Om dit makliker te maak om die voordele te verstaan, is die besonderhede vereenvoudig in hierdie skrywe. Hierdie beraming vervang NIE die reëls van die RVF of die versekeraar se polisse nie. In die geval van ‘n teenstrydigheid, sal die reëls of beleid van die RVF geld.
Nota 3
Hierdie beraming is nie bedoel om die soort gedetailleerde finansiële raad te wees soos omskryf in die Finansiële en Bemiddelende Dienstewet, 37 van 2002 nie. Wanneer keuses toegelaat word, word dit aanbeveel dat spesialis-finansiële raad verkry word voordat ‘n besluit geneem word.
Nota 4
Belangrik: Wanneer ‘n werkgewer besluit om by die RVF aan te sluit, kan die werknemers self besluit of hul wil aansluit, al dan nie. Daar word egter van allle nuwe werknemers wat aangestel word nadat die firma by die RVF aangesluit het, verwag om binne twaalf maande vanaf datum van aanstelling, by die RVF aan te sluit. Hierdie voorsorg sluit korttermynwerknemers soos kandidaat-advokate uit.
HOE OM BY DIE REGSVOORSIENINGSFONDS AAN TE SLUIT
Indien die werkgewer by die Regsvoorsieningsfonds wil aansluit, moet die volgende vorms ingevul word:
Vorms vir werkgewers – 3 vorms
Aansoek om lidmaatskapvorm
Gemagtigde ondertekeningsvorm
Debietordervorm
Vorms vir werknemers – 2 vorms
Werknemersregistrasievorm
Aanwysing van Begunstigde-vorm
Om in ‘n spesifieke maand aan te sluit, moet die vorms teen die 8ste van die spesifieke maand ingestuur wees. Byvoorbeeld: Indien u in November wil aansluit, moet ons die vorms teen die 8ste November hê. Die werknemers sal dan vanaf die 1e November gedek wees.
Kontak asseblief vir Ros Elphick (Tel: 012 997 1390 | Ee-pos: [email protected])
Indien u van hierdie vorms wil bekom.
“Sluit aan by 500 ander regsfirma’s/advokaatgroepe in die Regsvoorsieningsfonds om sy posisie as die beste aftredefonds-opsie vir die regsprofessie en sy weknemers te versterk”
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Please refer to my own website at http://www.designdynamics.co.za for examples of my work - please visit the following pages: HOME, NEWS, TRANSLATIONS and the 6 PORTFOLIO pages
Keywords: SKILLS PROFILE
Website Design
Website Re-Development
Website Maintenance
Graphic Design
Print Design
Desktop Publishing
Advertising Design for printed media
Compiling & design of brochures & pamphlets
E-mail Letterheads
Newsletter development
Logo’s
Translations and Editing (English to Afrikaans AND Afrikaans to English)
Proof Reading: Engish and Afrikaans
Writing
Printing
Mobile content design
Wallpaper design
Please refer to my own website at www.designdynamics.co.za
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