The Benefits of being a member of the NFMW

The fund's primary objective is to provide benefits for its members on their retirement or withdrawal and for their dependants or nominees in the event of the member's death. Generating investment returns for members is important to achieve this goal, but this is just one of the benefits of being a member of a retirement fund.

Here are some of the benefits that are worth taking note of:

Total contributions paid

The total monthly contributions made towards the fund are between 7.5% and 9% member contributions and 18% employer contributions on the main fund (Category C), dependent on the conditions of service. This is a total of 27% of pensionable salary, compared to the average contribution rate of a member in the private sector which is usually between 5% to 15%, with the employer deciding on the percentage contributions they want to contribute.

Tax deductibility on contributions

The contributions made to the fund are tax deductible, up to 27.5% of remuneration or taxable income, capped at R350 000. This lowers the amount of tax members pay on their annual taxable income and translates to more take-home pay. Members also have the option to enhance their retirement savings by making Additional Voluntary Contributions towards the fund.

Tax exemption applies while the retirement savings remain in the fund

No tax on interest earned is payable

No capital gains tax is payable

No dividend withholding tax is payable

Members only pay tax when they withdraw their benefit from the fund. There are however other investment vehicles available to members to minimise the amount of tax payable on exit and to preserve their retirement savings.

No estate duty on members' retirement savings

No estate duty is payable on a members' death benefit, which means the full benefit (multiple as per the member's risk cover option elected x annual pensionable salary + fund credit) is payable to the member's financial dependants and nominees in terms of Section 37C of the Pension Funds Act.

Members' retirement savings are protected

The fund is only allowed to make certain deductions from a member's retirement savings in terms of Section 37D of the Pension Funds Act e.g. compliant divorce grant payments and any amount outstanding in respect of housing loans which the fund issued surety for. The members' retirement savings are therefore generally protected from creditors.

Less towards costs and more towards retirement savings

The costs paid in the fund are significantly lower compared to a savings vehicle outside the fund. After retirement the post-retirement products offered by the NFMW provide members with the opportunity to manage their retirement savings. The major advantage is a cost benefit, as the management fees are significantly lower compared to the products available from external providers.

It pays to stay

With the exception of the tax relief of a higher rebate at retirement i.e. R500 000 at retirement (55 years and older) vs. only R25 000 at resignation, it pays to stay in the fund as long as possible. The longer you save, the greater the benefit payable when you end service, especially during the last few years before your retirement, when contributions are higher because of salary increases and you will be earning interest on a larger fund credit.

These are just some of the benefits of being and remaining a member of the NFMW.

For more information on the NFMW benefits and services on the Category C (Main fund) https://online.flippingbook.com/view/356412/ and on the Category A (2% fund) https://online.flippingbook.com/view/513173/.