Steps to take to retire with tax benefits
New retirement fund tax laws affect employees’ taxable income contributions or deductions, writes Romeo Msipha
Also, the new higher contributions rates may only be implemented for new employees and are voluntary for existing employees to ensure smooth implementation. 4 Find out if changes need to be made to the fund rules Employers need to confirm if the Master Rules of their retirement fund make provision for additional voluntary contributions. This will remove the need to make any changes to their Master Rules or Special Rules. 5 Partner with employees to help them make the right choices There are a few ways businesses can help make this process easier for employees: Give employees easy-to-understand guidelines on the contribution rates that would lead to a comfortable retirement. This could include face-toface workshops and presentations so that members understand the effect of contributing more.
Use triggers to prompt them to take the right actions. This could involve reminders about the value of increasing their contributions with their benefit statements or when they get their increases or bonuses.
Make sure every employee fully understands the default contribution rate and that they will be paying that minimum if they don’t specifically choose another rate.
Make it easy for employees to communicate with the human resources department or payroll about how much they want to contribute. Also ensure that they know when they can change this rate and the frequency.
Give employees easy access to financial advice, through workplace advisers or consultants. 6 Adjust the contributions on monthly payroll submission Employers will need to adjust their monthly payroll file submission to their pension or provident fund administrator so that this includes any additional contributions chosen by the employees.
Msipha is senior consultant of Old Mutual Corporate Consultants