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Moriting Defined Contribution Pension Fund

Definition

  • Provides pension benefits on retirement based on net contributions, plus net investment returns, as well as benefits on members withdrawing from service, death and/or disability.

Group size

  • From 20 employees to relatively large employee groups. 

Retirement

  • When members retire, their accumulated credit is used to purchase a pension. The accumulated credit consists of net employee contributions, plus net employer contributions, plus net investment returns accumulated during the period of membership.
  • Retirement age depends on the specific fund design and could range between 55 and 70.
  • Members can choose to retire on the normal retirement date, or retire earlier or later, with the consent of their employers.
  • On retirement, members can choose to use the accumulated credit by taking one third in cash and using the balance to purchase a pension. Members could choose to provide a pension on their own life and the life of their spouse and/or take an escalating pension and/or have the pension guaranteed for a minimum term and thereafter payable for life. The pension will be adjusted accordingly. A further option is to purchase a living annuity, which enables members to draw a pension from the accumulated credit but leave it intact upon death, in order to provide a legacy.

Withdrawal

  • On exit, the members' accumulated credit becomes payable.
  • Withdrawal benefits can be taken in cash or transferred to another fund.

Death

  • On death, members' dependants receive their accumulated credit, which is distributed according to the members' beneficiary nominations.
  • Based on the fund design, lump sum benefits that are worked out as multiples of salary and/or pension benefits may be payable to spouses and children, in addition to the accumulated credit.

 Disability

  • On cessation of membership due to disablement, the accumulated credit is payable. Additionally, depending on the fund design, a lump sum may be payable.
  • Should membership of the fund continue, a disability income benefit replaces the employee's salary.

 Employee contributions

  • Based on the fund design, employees may or may not contribute to the fund. No maximum contribution is prescribed. A maximum does apply in terms of tax deductibility of contributions.

Employer contributions

  • Employers' contributions are dependent on the fund design, and are typically equal to or greater than employees' contributions.
  • A minimum contribution equal to the total of administration and insured benefits costs is required. A maximum does apply in terms of tax deductibility of contributions.
  • Contributions are expressed as a percentage of members' salaries.

Deemed contributions

  • Where employees do not contribute, employers can make contributions on behalf of members.

Additional contributions

  • Employees may make voluntary, additional contributions.
  • Employers may make supplementary, employer contributions.
  • The parties may make recurring or lump sum additional contributions to purchase additional pension benefits. These contributions are tax deductible up to the maximum permitted by the law.

Inter fund transfers

  • Members may transfer accumulated benefits payable to or from other pension funds to the Moriting Defined Contribution Pension Fund.

Investments

  • Clients may choose to invest their money in a Trustee-approved basket of investment vehicles, or choose to belong to investment vehicles of their own choice. The latter is subject to request, the size of the fund and negotiated Service Level Agreements.

Administration

  • Moriting offers a highly automated, yet simplified administration system that minimises employers' administrative involvement in the day-to-day running of the fund.

 

Tax

  • Both employer and employee contributions are tax-deductible subject to the legal maximum.
  • Lump sum benefits are taxed in terms of current legislation.
  • Pensions are taxed as income.

 

Benefit statements

  • Annual benefit statements are provided to all members. Each new member receives confirmation of membership on entry to the fund.