Legal Provident Fund benefits and fees

Retirement savings

Fund salary: This salary is advised to the fund by the employer. It can be all or part of an employee’s basic annual salary or a percentage of the employees total cost of employment. For partners this would be their proportionate share of profits as declared by the employer.

Risk benefits

The fund offers employers the following optional risk benefits for their employees:

Employer contributions:

Employers can elect to contribute at one of the following percentages of fund salary: 5%, 7.5%, 9%, 10%, 12.5%, 15%. Employees can elect to contribute at one of the following percentages of fund salary: 0% or 5%. Employers and employees can both select to make additional Rand amount contributions to the fund. These additional contributions enhance a member’s final retirement benefit.

Monthly disability benefit:

For a premium of 0.294% of fund salary employees will be insured for a benefit of 75% of monthly fund salary, if they become disabled in terms of the policy requirements. This benefit is payable to the earliest of recovery, retirement or death. Note: On the payment of a monthly disability benefit the employee remains a member of the fund, continues to save for retirement and is covered for the death benefit.

Lump sum disability benefit:

For a premium of 0.8% of fund salary employees will be insured for a benefit of 2.6 times annual fund salary. For a premium of 1.5% of fund salary employees will be insured for a benefit of 5.3 times annual fund salary.

Death
benefit:

For a premium of 1% of fund salary employees will be insured for a benefit of 2.6 times annual fund salary. For a premium of 2% of fund salary employees will be insured for a benefit of 5.3 times annual fund salary.

Risk cover ceases on normal retirement date.

On the approval of a lump sum disability benefit, the employee’s retirement savings and insured benefits are paid to the member.

Fees deducted from employer contributions:

Administration fee (including VAT) of 0.512% of monthly fund salary (capped at R120 per member per month). Ad hoc fee of 0.1% of monthly fund salary (covers all fund related expenses, including communication, governance, statutory reporting etc.)

Fees payable in addition to employer contributions:

Risk administration fee (including VAT) of R23.37 per member per month. This fee is only payable by employers if they choose to provide employees with risk benefits.