Employee Benefits – The GCI Difference + Products

Employee Benefits

Pension and Provident Fund Structuring

Pension Fund

The objective of a pension fund is to provide employees of a group with a regular pension in retirement. Pension fund members must buy an annuity with at least two-thirds of their retirement fund at retirement; but there is an added incentive of tax deductibility for monthly premiums paid into a pension fund.

Provident Fund

The objective of a provident fund is to provide employees with a lump sum benefit at retirement. A provident fund is thus more flexible, as employees can still purchase an annuity with their fund; take the full lump sum value at retirement or any combination in between. Only the employer can claim a tax deduction for provident fund contributions.

Therefore, if the employment contract provides that the employee pays a part of the contribution, a pension fund is more tax-efficient for the employee. The maximum permissible tax free deductible contribution to a pension fund is 27.5% of salary or wage (7.5% deduction permitted by the employee), but only 20% for a provident fund (no deduction permitted by the employee).

Group Life Cover

This benefit provides cover for your family or dependents where your whole contribution goes towards covering the risk of your death. Life insurance can help to give your family or dependents some financial security because, when you pass away, it pays out a lump sum cash benefit to help them cover outstanding debt and survive when you are no longer with them.

Things to consider when investing in life insurance are the amount of cover you need and how it will pay out.
Start by getting a life insurance quote from GCI.

Group Disability Cover

Disability cover provides a range of benefits when a person is unable to work due to a disability or critical incident. South Africans remain massively underinsured against disability, and even if you do have cover, you may be at risk because it may be inappropriate. Contact GCI to ensure that your risk cover is sufficient.

Group Funeral Cover

Funeral Cover is seldom considered until the time comes to organise a funeral. Funeral Cover provides towards the cost of a funeral in the event of the death of an employee or a family member. Benefit payments and premiums will vary according to the group risk profile.

This provides a lump sum with 48 hours to cover funeral expenses should you or a family member pass away.

Group Medical Aid

The choice of health providers and their plan options are varied and can be extremely complex. You can choose your own plan depending on your actual requirements, in consultation with a GCI financial advisor. Small nuances in your and your families’ chronic illness conditions, and day to day requirements can dramatically affect the correct plan choice.

Plan upgrades can only be done at the end of the calendar year, should you find your current plan unsuitable; only in consultation with a GCI financial advisor.

There is no tax advantage to individual or group schemes but a group decision has the following requirements and benefits. Medical scheme fees tax credit (either group or individual) R242 plus one dependent and an additional R162 for each additional dependent (2014).

Discovery Health – Group underwriting decision

  • More than 10 main members – can have different plans
  • No waiting periods if group status approved while an individual member would be fully under-writable, resulting in late joiner penalties for members over 35. Three month general waiting periods and one year condition specific waiting periods apply.

Staff Retirement Counselling

GCI Wealth is an Independent Financial Services Provider. This means that we have no specific product provider allegiances and can offer you the best possible solution for your specific retirement needs, wants and affordability. This is critical given that there are certain limitations for cover allowed and to ensure there is no over-insurance and wastage of premiums.

The Pension fund also has an impact on the tax deductibility of existing retirement annuities, which needs to be highlighted and comprehensive advice be given on the most appropriate retirement savings mechanisms that maximise your tax and investment returns.