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Pay into provident
- Thread starter DrewChan
- Start date
MOwrt
Well-Known Member
No provident fund, we have an RA though. And no the company does not contribute.
Edit** minimum of 7.5% pre tax salary max is 15% I think
supersunbird
Honorary Master
With pension fund we paid 7% (could up it to 7.5% voluntarily) and the employer payed 7%.
We have now got a new employer that uses a providend fund, I have to wait till I get my new payslip to see whats what...
We have now got a new employer that uses a providend fund, I have to wait till I get my new payslip to see whats what...
D3x
Expert Member
We can go up to an 18% contribution.
Budza
Executive Member
Tinuva
The Magician
We don't have a provident fund either, but a RA. By default if you opt to have it from the company, you pay 5% of your salary into it. I went back to them and asked what is the maximum amount they will match me if I up it, and they said 7.5%, so I asked for that instead. So currently pay 7.5% and company match me with another 7.5%, so I get 15% in total of my salary paid into the RA, of which I only pay 7.5%.
I think its a nice bonus, and obviously it ups the CTC slightly.
I think its a nice bonus, and obviously it ups the CTC slightly.
D3x
Expert Member
Nope, sorry, should have mentioned that. We pay the Prov Fund contribution & the company pays our group life cover, disability, death & they pay for the Prov Fund administration fees which can be quite exorbitant.
The most I have ever received is an 11% figure which was matched by a company I used to work for.
SauRoNZA
Honorary Master
The company never contributes.
Don't ever look at it like that unless your company contributes to your fund outside of your CTC which I've never seen happening.
It's simply your money (part of your package) which they are scoring tax benefits on.
If they are willing to match what you put it, regardless of whether it pushes up your CTC then you are working for a very nice company.
Don't ever look at it like that unless your company contributes to your fund outside of your CTC which I've never seen happening.
It's simply your money (part of your package) which they are scoring tax benefits on.
If they are willing to match what you put it, regardless of whether it pushes up your CTC then you are working for a very nice company.
SaiyanZ
Executive Member
This. There is no "matching" going on by companies. They just allocate a portion of your CTC to retirement. You choose how much. It's all your own money. i.e. nothing extra from the company.
Budza
Executive Member
CTC is different to base salary though- if I get an increase, it's on base only. CTC has the other stuff added in. When quoting your rate, do you work on CTC (with benefits) or base salary (excl benefits)?
Or does that depend on the company and how they structure things- IE, not hard and fast rule?
SaiyanZ
Executive Member
The norm is as follows:
- salary increases are applied to CTC
- benefits such as medical aid and retirement contributions come off your CTC.
- you are then taxed on what's left
- you then get your net salary in your bank account
Depends on how its communicated to you. And I dont quite agree with you that companies never contribute. In fact, often people dont undertsand that even if the employer is contributing 7.5% to your retirement funding, they may in fact be contributing a total of (say) 10% with the difference going to pay administration costs and various forms of insurance cover.
Oh, and you cant just pay in whatever you want with the employer having an option to match it or not - the contribution amounts/percentages are specified in the rules of the fund, which have to be approved by both SARS and the FSB.
SauRoNZA
Honorary Master
Point is at the end of the day it's really "your" money they've agreed to pay you as a finite cost and they play the psychological game of making you feel like they are doing you a massive favour.
So instead of seeing it as 7.5% of "mine" plus 7.5% of "theirs" it's really just 15% of YOURS.
So instead of seeing it as 7.5% of "mine" plus 7.5% of "theirs" it's really just 15% of YOURS.
Only your employer can contribute to a provident fund. They can contribute up to a max of 15% of your salary. If they do not contribute 15% and you would like to top it up your self, you should sacrifice some salary and get your employer to contribute on your behalf. Through the reduction of your salary you will pay less tax. If you contribute in your personal capacity to a provident fund your taxable income will stay the same and there will not be any tax advantage. Contributions to pension funds and retirement annuities are a different story..
supersunbird
Honorary Master
Mmmm, we are going over to Cost-To-Company and the providend fund contribution will be determined by us and we can contribute from 5%to up to 17.5% if we want (but it comes from our new Cost-To-Company salary, not from the employer).
My point is that legislation only permits provident fund contributions to come from the employer side, regardless of how much is contributed and what basis the contribution is calculated on. The payments are generally structured so that contributions can from your income before tax or cost to company.. that way your income tax is reduced and you benefit from the tax incentive of saving for retirement. An individual can only contribute in their own capacity in a pension fund or retirement annuity.
SauRoNZA
Honorary Master
At the end of the day it's nothing but fancy words for the same thing really.
The primary difference being that if your employer pays it the tax gets deducted every month and you don't get a rebate at the end of the tax year because you've already received the benefit every month.
Whereas when you do it yourself you pay more tax every month, but you get it back in the form of a tax rebate every year.