Super Fund is a ‘defined contribution’ type, and as such the employer’s contributions are as a percentage of salaries.
Having the option of choosing the basic contribution rate, the employer keeps absolute control over its financial commitment to its employees’ pension funding. This concept is known as a “Defined Contribution Fund” as opposed to the classic “Defined Benefits Fund” where there is no guarantee on the level of future contributions. Under current accounting standards, any deficit in a “Defined Benefits Fund” will have to be reflected in the company’s balance sheet.
By its very nature, Super Fund will not give rise to such a situation
Contributions to members’ account.
The Employer decides on the amount he wishes to contribute to the fund. It is calculated as a percentage of the basic salary of the employee. Employees willing to top up are free to do so by making personal contributions to the Fund. In fact, they can contribute any percentage of their salaries.
Contributions for expenses.
The employer also needs to make an additional contribution towards administrative and other costs and a “Death and Disability ” cover which is reinsured at the best available terms on the market. A provision for “Spouse and Children pension” can also be arranged to suit each Employer individually.
The employer also needs to pay a contribution for expenses which comprise of the following:
- Administration Fees
- Marketing Fees
- Actuarial Fees
- Investment Fees
However the pooled fund concept allows economies of scale, which implies that the bigger the fund grows, the lower the management fees as a proportion of the fund.
Employees willing to top up are free to do so by making personal contributions to the Fund. In fact, they can contribute any percentage of their salaries. At the outset the Employer sets the contribution structures.
Joining a company pension scheme is particularly easy for employees as the administration is taken care of on their behalf. If they top up their employer’s contribution towards their pension they are boosting their pension savings even further.
When you’re in your 20s
You probably think that you have plenty of time to save up for your retirement and for now you would rather spend your money on having fun. But it’s worth bearing in mind that a person who starts saving at 20 could build a pension fund of nearly twice as much as they might if they left it until their 30s. Or to put it another way, if you start saving now it is going to cost you a lot less in the long run to achieve a decent standard of living in retirement.
When you’re in your 30s and 40s
The chances are that life is progressing at a hectic pace:
– you’re juggling work with family commitments and still trying to enjoy a decent quality of life – all of which is a drain on your resources. At the same time, you want the kind of lifestyle you’ve worked so hard for to continue for as long as possible.
So, bear in mind that you can top up your pension payments to give yourself a better chance of achieving your retirement income goals and in most cases you can transfer the value of your pension savings to another plan if you move jobs.
How does it work?
- Your employer makes contributions for you and you can top up that contribution;
- You do not pay tax on any employer contributions;
- Contributions are invested in line with your choices;
- You will receive a statement each year showing you the value of your account and an estimate of the pension that you might expect to receive;
- We provide you with plenty of information and guidance along the way that you can access online or request by phone or email and
- Just before you reach your chosen retirement age we will write to remind you of the options available.