Pension & Provident Funds

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A regular pension in retirement

Pension Fund

Pension funds provide employees of a group with a regular pension in retirement, ensuring they are able to live a fulfilling life when they’re no longer able to work.

Pension fund members must buy an annuity with at least two-thirds of their retirement fund at retirement; but there is an added incentive of tax deductibility for monthly premiums paid into a pension fund. A pension fund is more tax-efficient than a provident fund for the employee (if the employee pays a part of the contribution).

Provident Fund

The objective of a provident fund is to provide employees with a lump sum benefit at retirement. A provident fund is more flexible, as employees can still purchase an annuity with their fund, take the full lump sum value at retirement, or any combination in between.

Only the employer can claim a tax deduction for provident fund contributions.

What are my contribution rates?

There is no fixed contribution rate. We believe an appropriate savings strategy in the region of a 15% contribution rate might suffice for a 40-year savings period, but this is negotiable and adaptable.

Some companies provide one contribution rate and all other benefits, insurance etc., are deducted from this percentage. Others set up different employee categories and vary the contribution rate and/or insurance benefits by category. You can be flexible in designing employee benefit packages – but it helps to have the advice of an expert.

At GCI, we also understand that it is not always possible to kick your retirement fund off with a full contribution rate. We can tailor make a solution for you where contribution rates are increased over a period of 3 to 5 years, with little impact on both the employer and employees’ salaries and expenses. Talk to us about your employee retirement fund needs.

Talk to an expert GCI consultant about the best pension or provident fund options for your business