How to Calculate Pension Fund Contribution in South Africa
How is pension fund contribution calculated?
In South Africa, the pension fund contribution for employees is 7.5% of your pensionable salary towards the fund, while your employer’s pension contribution is 13% of your pensionable salary.
What is the formula for calculating the pension amount?
For example, an employee earns R4, 500 a month, while R3, 500 is pensionable. Therefore, an employee contribution will be as follows (7.5% x R3, 500), which is R262.50, While an employer pays (13% x R3, 500), which is R455.
What happens to my pension fund when I retire?
After retirement, you may take up to a maximum of one-third of your savings in a cash lump sum. However, this cash lump is taxable.
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What happens to my pension if I leave a company before I retire?
When you leave or resign from a company, you must move your retirement savings out of the company’s fund. You can, however, move to either of these;
A preservation fund
Your New Company’s pension fund
Or to a retirement annuity fund.
What is the average pension contribution in South Africa?
The average contribution from the company on behalf of employees is 9.9% of salary.
Does your employer pay your pension fund contribution in South Africa?
Yes, your employer pays 13% of your pensionable salary.
