Members in the engineering and metal Industries have scored another victory in the engineering sector, as the contribution to pensions will increase from 13.2% to 18%.
This will mean a salary replacement value of at least 70% of their last wage before retirement.
Vusi Cibane, chairperson of the shop stewards’ committee, said during the surplus negotiations that trustees had agreed to utilise the employers’ share of surplus to increase the contribution from 13.2% to 18%. This has been approved by the Financial Services Board.
The members’ contribution will increase from 6.6% to 7.5%, while the employer contribution will increase from 6.6% to 10.5%.
The increase will be take effect gradually, with the contribution from members’ pay and the employers’ contribution rising initially from 6.6 % to 6.7%.
The difference will subsidised by CIPRA, the Contribution Increase Programme Reserve Account. This is a long-term programme that will allow members and employers to increase the contributions in phases.
It will take members nine years to phase in their full 7.5% contribution, while employers will take 29 years to phase in their full 10.5% contribution.
If a member enters the fund at the age of 20 and retires at 60, he or she will have worked in the industry for 40 years. With the increase from 13.2% to 18%, this member will retire with at least 70 % of his/her last salary.
With the previous contribution of 13.2%, the member would have retired with at least 30% of his/her last salary. Neerejh Ramlakhan, the fund’s labour consultant and an actuary by profession, said: “Most of the fund’s salary replacement value is 30%, so the 18 % contribution is a victory for members, as they will be able to maintain their standard of living.
“Most of workers think that the government’s social grants for old age people can provide enough to live, but that is not true. Also, the government is planning to discontinue paying social grants to people who have been employed,” concluded Nareejh.
|Effective dates||Current Contribution, members and employers||Increase by members and employers||
Subsidy by CIPRA
|July 1 2012 to June 30 2013||6.7 % each||0.1 % each||4.6 %|
|July 1 2013 to June 30 2014||6.8 % each||0.1 % each||4.4 %|
|July 1 2014 to June 30 2015||6.9 % each||0.1 % each||4.2 %|
|July 1 2019 to June 30 2020||7.4 % each||0.1 % each||3.2 %|
Motor industries get better death benefits
Normally, when a member of a retirement scheme passes on, the beneficiaries receive a lump sum equal to three times the person’s annual salary plus his/her contributions and the employers’ contributions.
Motor was lagging
After analysing the cost of death benefits and comparing the motor industry with other funds in the metal, auto and new tyre manufactures, Simon Khanyile, a trustee of the Motor Industries Retirement Fund realised that motor was lagging behind.
This was because when a member of the fund passed on, the beneficiaries were only paid three times the annual salary and the members’ contribution – while the employers’ contribution was not paid at all.
After being pushed, the fund and the employers agreed to pay the beneficiaries the employers’ contributions as well. Khanyile said that beneficiaries of members of the motor industries fund would now enjoy the same benefits as those of other funds.
Samuel Tsiane is Numsa’s national benefit coordinator.