Legal Provident Fund Fees And Benefits
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 referred to as additional voluntary contributions or AVC’s. These AVC’s enhance a member’s retirement savings.
Retirement
savings
Fund salary: This salary is advised to the fund by the participating employer. It can be all or part of an employee’s basic annual salary or a percentage of the employee’s total cost of employment. For partners this would be their proportionate share of profits as declared by the employer.
Fees
applicable
Administration fee (including VAT) of 0.516% of monthly fund salary (capped at R120 per member per month). Operational fee of 0.22% (from 1 April 2020) of monthly fund salary (covers all fund related expenses, including audit fees, bank charges, levies due to the Authority, communication, governance etc.)
Risk
benefits
The fund offers employers the following optional risk benefits for their employees:
Fees Applicable
Risk administration fee (including VAT) of R23.60 per member per month. This fee is only payable by employers if they choose to provide employees with risk benefits.
Death benefit
For a premium of 1% of fund salary employees will be insured for a benefit of 2.7 times annual fund salary. For a premium of 2% of fund salary employees will be insured for a benefit of 5.4 times annual fund salary.
Lump sum disability benefit
For a premium of 0.8% of fund salary employees will be insured for a benefit of 2.7 times annual fund salary. For a premium of 1.5% of fund salary employees will be insured for a benefit of 5.4 times annual fund salary. Risk cover ceases on normal retirement date. On approval of a lump sum disability benefit, membership of the fund ceases and the employee’s retirement savings and insured benefits are paid to the member.
Monthly disability benefit
For a premium of 0.78% 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. 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 if selected by the employer.