HOME
Home
 
  Secure your future – it’s never too late to start      
   
 
Frequently Asked Questions 

Membership of the UCTRF

  1. Do I have to join the UCTRF?

DPA and CoE

  1. What are DPA and CoE?
    DPA - Deemed pensionable amount (as determined by you)
    CoE - Cost of Employment

    All permanent and T2 contract staff are required, as a condition of service, to become members of the employer’s provident fund (the UCTRF). In terms of the Rules of the Fund, contributions to the UCTRF are payable by the employer as part of a staff member’s CoE (currently 22,5% of the DPA for permanent staff and T2 Contract staff whose current contract of employment started on or after 1 July 2017 and 20,912% for other T2 contract staff). The DPA is a percentage of CoE and is a figure used to calculate the amount allocated to the Fund and Fund benefits. Staff may elect this percentage on joining the UCTRF and when there is a change in their CoE. If a member does not elect their DPA on joining the Fund, the following default DPAs linked to annual CoE will apply:

    Annual Cost of Employment

    Recommended DPA

    Up to R150 000

    70%

    R150 001 to R250 000

    75%

    R250 001 to R400 000

    78%

    R400 000 +

    80%

    Can I change my DPA? When can I change my DPA? 

    Staff may increase or decrease in their DPA which will result in a greater or lesser Fund contribution amount. There will be an associated increase or decrease in the Group Life Assurance cover, disability cover and the fringe benefit tax on the Separate Group Life Assurance cover. Please note, however, that any increase in the Fund contribution will not result in an increase in your guaranteed CoE, but will form part of your guaranteed CoE. 

    The DPA amounts are optional between 50% and 100% subject to the following conditions:

    (i) Staff who increase their DPA by more than 10% may be required to complete a health questionnaire for the insurer who reserves the right to limit the cover based on their underwriters assessment.

    (ii) Once a member has changed their DPA they can only change it again at a future annual CoE review.

    (iii) Staff who decrease their DPA to less than the recommended amount must schedule an interview with their HR Practitioners who will take them through the consequences of their decision and ask them to sign an acknowledgment of these consequences. 

  2. Why has nobody ever told me before that I may change my DPA?                                                                                                                                                                                                                            
  3. Your HR Practitioner should advise you of this option at every CoE change.                                                                                                                                                                                                                        
  4. What is my % DPA?

    Please contact your HR Practitioner should you require this information. You can also view your Deemed Pensionable Amount on your UCT payslip under 'other information'.


Contributions

  1. Can I contribute more/less towards my retirement funding?

  2. How much do I contribute towards the UCTRF?

  3. What is the difference between accumulated account and future contributions?
    Your accumulated account is your total value in the Fund, referred to as your Retirement Savings Account.  Your future contributions are all the monthly contributions you are still going to make into the future.


Divorce orders

      

A member’s retirement benefit may form part of the couple’s overall assets and a portion is often paid to the ex-spouse in the case of divorce. The portion paid to an ex-spouse will depend on the percentage specified in the Divorce Order. 


What information should be contained in a Divorce Order?

The following information should be included in your Divorce Order; otherwise the Fund cannot pay the ex-spouse directly: 

• The full name of the Fund (i.e. the University of Cape Town Retirement Fund) 
• That the Fund is ordered to pay the benefit to the non-member spouse 
• The value of the benefit either as a % or Rand value 

If the Divorce Order does not make these provisions, the Administrator of the Fund has no obligation to pay the ex-spouse any portion of the member’s benefit.

Here is a suggested clause to be used in the Decree of Divorce to ensure that the Decree is legally binding on the Fund:

The non-member spouse is entitled to xx% of the member’s pension interest in the University of Cape Town Retirement Fund on the date of divorce. The University of Cape Town Retirement Fund is ordered to pay this amount to the nonmember spouse, together with interest earned in the Fund on this amount from the date of divorce to the date of payment. 

When will the benefit be paid to my ex-spouse? 

The non-member spouse can receive the benefit from the Fund, subject to the Decree of Divorce complying with the requirements of the Act. 

If the claim meets the legal requirements: the Administrator sends a payment instruction form to the ex-spouse to complete. Once the completed form is received, the Administrator applies for a tax directive from SARS and makes payment to the ex-spouse (after deducting any tax that is payable to SARS).

Who will pay the tax on the benefit paid to my ex-spouse? 

The ex-spouse pays the tax on his/her benefit.


Investments

  1. Where is my benefit invested?
    The UCTRF allows member investment choice, which means that you choose where to invest your fund credit.

    If you are under 60 and you do not make any choice when you join the UCTRF, then your accumulated retirement savings will be invested in accordance with the Life Stage Model.

    If you are 60 or older when you join the UCTRF and you do not make any choice, your accumulated retirement savings will be invested 100% in the Income Fund. This is a conservative approach and you should consider whether this meets your needs.

    You may elect a different option at any time. Your investment portfolio is indicated on your benefit statement which you can view on the Retirement Fund Web.                                                                                                                                                                                                                                                                                      
  2. Where should I invest my benefit?

  3. How often can I change my investment choice?
    You can switch your investment portfolio/s at any time, but you should be aware that switching frequently may work against you. It is better to select the option that is right for you and your long term needs, and only switch if and when your needs change. In addition, if you switch more than once in a tax year, you will pay an administration fee for each additional switch. Click here for more information on how to make an investment choice.  The most common investment mistakes (one of which is trying to time the market - switching your investments when markets drop) can be viewed here.

  4. What does a “market value adjustment” mean? And why is it implemented sometimes?
    A market value adjustment is when the assets of an investment is adjusted to the true market value.  This is very similar to the re-evaluation of your house from time to time.  It occurs when the underlying assets of the investment have changed in value.

  5. Which Fund do you think I should invest in?

  6. What is the Life Stage Model and why do we have such a model?


Withdrawal Benefits

  1. How much money will I receive when I resign?

  2. On how much will I be taxed at resignation?

  3. How soon after resignation will I receive my benefit?
    You will receive your monies from the Fund within 15 business days of receipt of all necessary information, provided that all contributions have been received and are up to date and receipted and that the administrator of the Fund receives a tax directive from SARS within 2 business days of making such an application.

    This service level shall be extended for the same period that these requirements are not met.

  4. Will I receive interest on my benefit while my payment is being processed?
    Yes. Your money is invested in a money market account until the tax directive is applied for and from this date bank interest is added until date of payment to you.


Retirement Benefits

  1. How much money will I receive when I retire?
    You will receive your Retirement Savings in the UCTRF. If you want an indication of how much your benefit will be worth when you retire, please make use of the Retirement Calculator.


  2. How much will I be paid as a monthly pension?

    The UCTRF is a Provident Fund and is designed to provide a pension (in the form of an annuity) at retirement. However, full commutation of this benefit is allowed, which means that you can choose to receive your retirement in any of the following ways:

    (a)     As a monthly pension only;
    (b)     As a monthly pension and a lump sum; or
    (c)     As a lump sum, in a once-off payment in final settlement of your benefit.

    If you elect option (a) as a monthly pension only, you must choose either a living annuity from the UCTRF or purchase a life or living annuity from a registered insurer.  When choosing your pension, you should arrange a type of pension and amount to suit your particular needs.  This is why it is advisable to see a Financial Advisor when planning your retirement.

    If you elect option (c) as a lump sum, in a once-off payment in final settlement of your benefit, then the Fund’s obligation to you ends the day you receive your retirement fund credit as a lump sum. 

    It is important to note that the Fund’s obligation to you also ends should you choose an annuity from an insurance company, rather than a living annuity from the UCTRF.

    If you elect option (b) as a monthly pension and a lump sum, the same conditions apply as stipulated above.

    What is a ‘life annuity’?

    It is a monthly pension, which is guaranteed for your life.  The insurer calculates the pension you will receive every month and this depends on the amount of your retirement fund credit and the type of pension you choose.  The following factors play a role:

    • Whether you have elected to take a lump sum, or not;
    • Whether you have elected to include a guaranteed period, or not - 
      • This means the pension will continue to pay out (to whomever you elect i.e. your spouse and/or your dependants) until the terms ends, even if you die during this period.  For e.g. if you choose a 5 year guaranteed period, your pension is guaranteed to pay out from your retirement date until the end of the 5 years, even if you die in the first year.
    • Whether you have elected that a spouse’s or dependant’s pension must be paid after your death –
      • This means the pension will continue to pay out (for life) to your spouse or dependant after your death, even after the guaranteed period has expired.  However, should your spouse also die after the guaranteed period has expired and you did not choose to include a dependant pension, the monthly pension will no longer pay out.
    • The insurer guarantees the pension, so it provides you with security – the only risk is if the insurer becomes insolvent.

What is a ‘living annuity’?

When you leave your retirement fund credit with the Fund (or an insurer providing a similar product), it is then treated as a savings account and will grow with investment returns. 

The Commissioner for the SA Inland Revenue Services (RF 1/96 as amended), stipulates that you must take between 2.5% and 17.5% of the total value of your account annually as a pension, but that the annuity must at all times produce a life annuity.  This may mean that the maximum you may take is likely to be lower than the normal range of 17.5%.  You can adjust your pension annually within these constraints.

The pension can be paid to you monthly, quarterly, biannually or annually (if you take a monthly pension, the monthly amount is fixed for the coming year based on the amount invested at the beginning of the year and your chosen percentage).

    1. On retirement, how much can I take in cash?
      You will be able to take your entire benefit in cash. This is not a recommended option due to the tax implications. 

    2. How much will I be taxed at retirement?
      No tax is payable on your retirement benefit if you choose to use your full benefit to purchase your pension. There will be tax payable on the pension payment that you receive, based on individual income tax rates, this can be calculated by your Financial Advisor at the time of your retirement.

    3. How soon after retirement will I receive my benefit?
      You will receive your monies from the UCTRF within 15 business days of receipt of all necessary information, provided that all contributions have been received and are up to date and receipted and that the administrator of the Fund receives a tax directive from SARS within 2 business days of making such an application. However, any information that is required and/or request and not submitted or is outstanding, will delay the process.

    4. Will I receive interest on my benefit while my payment is being processed?
      Yes. Your money is invested in a money market account until the tax directive is applied for and from this date bank interest is added until date of payment to you.

    5. Can I decide where to purchase my Living Annuity?
      Yes, please refer to the different pension options at retirement link on the Retirement Benefit page for more information on the options available to you.

    6. Can I decide where to purchase my living annuity?
      Yes, the Rules of the Fund allow that a Member, Deferred Pensioner or a Beneficiary may purchase a pension in the form of a Living Annuity from the Fund, a life annuity from an Insurer, or a living annuity from an Insurer, or a combination of a life and living annuity from an Insurer.

    7. Can I change Insurers at a later date if I took the Living Annuity with the Fund in the first instance?
      Yes, the Rules of the Fund allow that a person in receipt of a Living Annuity may instruct the Fund to apply the Living Annuity balance to purchase a life annuity, or living annuity from an Insurer.

    8. Can I apply for unemployment when I retire and how much will I receive?
      Yes, staff members who have contributed to the UIF, can have a UI 19 completed for them on retirement and they can register with the Department of Labour for benefits that might be payable to them.

    9. What other benefits will I receive when I retire?
      Please refer to the UCT website for the rights and privileges of retired staff in respect of tuition fees, the medical aid subsidy and UCT sports facilities.

    10. How much medical aid subsidy will I receive as a retiree?  
      Please refer to the UCT website for this information.  


Death Benefits

  1. What are my death benefits?

  2. When can I update my nomination of beneficiaries?

  3. How often should I complete the Beneficiary Forms?

  4. Where can I send my forms once completed?
    Please return your forms to the person specified on the form you have completed.

  5. When can I update my nomination of beneficiaries?