THE COMPOSITION OF THE MEMBER ACCOUNTS
Fund Credit
All monthly contributions, excluding contributions to risk benefits and administration costs, plus all bonuses be it positive or negative, are allocated to the Fund Credit account of members. Members will be able to see the value of the Fund Credit on a daily basis, once they have registered on the website of the administrator www.retirementfundweb.co.za.
Although contributions accumulate in the member’s Fund Credit account, it remains a Fund asset and accrues to the member only on termination of membership.
RETIREMENT AGE
- Normal retirement age is 65 years.
- Members may voluntarily retire from age 50.
- An extended retirement after normal retirement age of 65, on condition that the employer and member mutually agree accordingly, is allowed. The usual contributions will continue, but the member will no longer enjoy any death or disability cover after age 65, only family funeral benefits are payable. The member will not contribute towards the risk benefits after age 65.
Although the benefit does not differ whether a member retires or resigns, it may be tax efficient to retire rather that to resign. More information is available on request.
BENEFITS
The MGF is a defined contribution retirement fund (DC fund) where the member will always, even upon resignation, be entitled to at least all member contributions plus the contributions of the employer after the contributions for risk benefits and administration cost have been deducted plus or minus the net return.
Benefits are as Follows:
- CONTRIBUTIONS
- Members
Members contribute at a minimum rate of 7.5% of their annual salary which contribution is allocated in total to the member’s Fund Credit. - Employers
For members who joined before 1 July 2012 the standard contribution rate of employers is 22% of a member’s pensionable income. For members joining after July 2012 it is 18%. In total 4% of salary is utilized to finance risk benefits (approximately 3.60%) and administration costs (approximately 0.40%). The balance of the employer’s contribution is credited directly to the member’s Fund Credit. Employers may, with the consent of members and the Management Committee, contribute at a lower or higher rate, subject to such conditions as imposed by the Management Committee. - Contract Appointments
Such members may structure their contributions according to their requirements but subject to the following minimum:- 4% (minimum) employer contribution.
- 7.5% (minimum) employee contribution.
- Members
- RESIGNATION AND DISMISSAL
A lump sum equal to the member’s total Fund Credit, subject to tax as indicated: - RETIREMENT
On retirement a member will become entitled to an annuity obtained by investing the Fund Credit less any amount the member elects to take as a lump sum. Such annuity must be arranged with an external insurer. A member may elect to take any portion, even 100%, of the Fund Credit as a lump sum payment. The Fund also adopted an Annuity Strategy in terms of which a life annuity (guaranteed pension), subject to certain conditions, can be arranged by the Fund for the member with Sanlam. More information is available from the Fund. This option may be more tax efficient for the member than taking a cash lump sum.
Lump sum cash retirement benefit Tax liability First R550 000 0% (provided you have not used this exemption before) R550 001 to R770 000 18% of taxable income above R550 000 R770 001 to R1 155 000 R39 600 + 27% of taxable income above R770 000 R1 155 001 and above R143 550 + 36% of taxable income above R1 155 000
Please note that the R550 000 tax free, and the table, are applied to a person’s cumulative lump sum retirement benefits from all funds i.e. will include both pension and provident sections and retirement annuities, over your lifetime. These tax rates and limits can change so make sure you get up to date information on the effect tax will have on your benefits before you make any decisions. - RETIREMENT BENEFITS COUNSELLING
Access to retirement benefits counselling is given as follows:- Toll free number: 0800 111 956
- Email: retire-mate@sanlam.co.za
- DEATH OF A MEMBER (See also notes further on)
- Members with more than 5 years' membership:
- A lump sum equal to four times annual salary PLUS Fund Credit.
- Members with less than 5 years’ membership: - Unnatural causes: A lump sum equal to four times annual salary PLUS Fund Credit.
- Natural causes: A lump sum equal to two times annual salary PLUS Fund Credit.
- FAMILY FUNERAL PLAN
Increase in the Family Funeral Plan with effect from 1 August 2023Up to 31 July 2023 From 1 August 2023 Member R40 000 R45 000 Qualifying spouse R30 000 R33 500 Qualifying child age 14 and older R20 000 R22 500 Qualifying child age 6 and older but younger than 14 R10 000 R11 500 Qualifying child younger than 6 R 5 000 R 5 750 Still-born qualifying child R 5 000 R 5 750
* Full time student up to 25 years and permanent disabled children irrespective of age, included.Legislation prohibits the payment of the funeral benefit to any other person, but the nominated beneficiary.Please ensure that all members have completed the Funeral Benefit Nomination form, which is available on the Fund’s website www.mymgf.co.za under the “Forms” tab.
The Benefits Claim Form is available from SANLAM. The email address for submission of claims is: sgrdeathclaims@sanlam.co.za and fax number is 021 947-1288. A claim expires after 6 months.
- MEDICAL DISABILITY (See also notes further on)
A member who qualifies for a medical disability benefit will be entitled to four times annual salary or Fund Credit, whichever is the greater, up to the age of 60 after which the benefit scales down monthly up to the age of 65 to two times annual salary or Fund Credit whichever is the greater.
| Lump sum withdrawl benefit | Tax liability |
| R0 to R27 500 | 0% |
| R27 501 to R726 000 | 18% of the amount above R27 500 |
| R726 001 to R1 089 000 | R125 730 + 27% of the amount above R726 000 |
| R1 089 001 and above | R223 740 + 36% of the amount above R1 089 000 |
The tax-free threshold of R27 500 and tax table are cumulative and apply to the total amount of your withdrawals from funds in your lifetime. In addition, the tax concessions granted on early withdrawal (resignation) will reduce the tax concessions at retirement. Tax rates and limits can change at any time, so make sure you get up to date information on the effect tax on your benefits before you make any decisions. Therefore, if you elect to take your resignation benefit in cash, not only do you severely prejudice your future retirement savings, but you also significantly reduce the tax concessions that you will receive at retirement.
HOWEVER:
A member who has less than five years’ membership and qualifies for a medical disability benefit due to an injury, illness or condition which he/she:
within twelve month preceding the commencement of membership of the Fund, shall be entitled to the greater of two times annual salary or Fund Credit.
The current disability benefit remains in place for all members who are members of the Fund with a joining date prior to 30 June 2023. If such member becomes disabled after 1 July 2023 the greater of the current disability or new disability benefit will be payable. New members joining the Fund from 1 July 2023 will only be liable for payment of the new disability benefit. The new disability benefit applicable from 1 July 2023 will pay a disability benefit equal to fund credit PLUS a scaled multiple of annual salary. The distinction is still in place for members with less than 5 years’ service who have a pre-existing condition, where they will receive the greater of 2 times annual salary plus their fund credit or the existing benefit if that is greater for membership prior to 1 July 2023. Members who joined the Fund from 1 July 2023 will only be liable for the new disability benefit explained in the table down below.
| Attained age at date of disability | Scaled multiple in excess of member share | Reduced multiple for members with less than 5 years’ service with pre-existing condition |
| Up to age 30 | 4 times | 2 times |
| Age 31 to 35 | 3.5 times | 1.75 times |
| Age 36 to 40 | 3 times | 1.5 times |
| Age 41 to 45 | 2.5 times | 1.25 times |
| Age 46 to 50 | 2 times | 1 time |
| Age 51 to 55 | 1.5 times | 0.75 times |
| Age 56 to <65 | 1 time | 0.5 times |
Members 65 years and older do not enjoy any disability benefits. The 3.60% of the employer contribution required for risk benefits is allocated to their fund credit, thus they are not paying towards any risk benefits.Should you require any clarity on the disability benefits please feel free to contact the Fund’s office.
NOTES: Risk benefits (death and disability) are subject to adjustment depending on the claims experience. The actuary of the Fund monitors this on a continuous basis to advise the Management Committee (Board of Fund) to make adjustments timeously. Enquiries should be made to verify whether any changes were made in this regard since the date of the brochure.
- REDUNDANCY OR RETRENCHMENT A member who becomes redundant or is retrenched is entitled to the member’s total Fund Credit plus an additional amount financed by the employee. Payment of the relevant benefit is subject to receipt of the employer’s contribution. The additional amount is determined according to years prior to normal retirement. The maximum additional amount payable is equal to the Fund Credit.
- NOMINATION FORMS
Members should complete the prescribed nomination of beneficiaries form and submit it together with copies of certified I.D. or birth certificates. If available to mgfbeneficiary@sanlam.co.za or fax to (012) 683-3996. This will expedite the payment of death benefits. Please make sure that the total percentage equals 100%. - FINANCIAL ADVICE
The MGF and its employees are not registered as financial advisors and are by law prohibited from giving financial advice. It may only furnish factual information. If members need financial advice they should obtain it from registered financial advisors. The Fund can be approached for contact details of financial advisors.
Retrenchment benefits for members appointed on contract may vary in terms of the contract entered into between employer and employee.
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