BENEFITS PROVIDED BY THE FUND
This section of the member guide deals with the benefits provided by the Political Office-Bearers Pension Fund for its members. The next section covers some additional benefits for Fund members that are not actually provided through the Fund or specifically dealt with in the Fund Rules – these are included in this guide because the cost of these benefits is also part of the total contributions paid by the State for member’s retirement and related benefits.
The areas covered in this section are:
- The design of the Fund
- The contributions payable by you and by the State
- What benefits you will receive when your term of office ends (on retirement or resignation)
- What benefits your dependants will receive (from the Fund) if you die in office.
The Political Office-Bearers Pension Fund is a Defined Contribution arrangement. Defined Contribution means that each month the Fund receives contributions from the State (as your “employer”) and from yourself. Your own contributions and part of the employer contributions are allocated for your retirement savings in the Fund. These contributions grow with the net investment returns (which may be positive or negative) earned by the Fund on its investments. The net investment returns are calculated by the Fund’s actuary on a monthly basis.
So, the amount that you will have available for your retirement will depend on two factors, namely:
- The contributions that have been set aside for you as retirement savings;
- Most importantly, the net investment returns the Fund earns on this money.
These contributions and investment returns are recorded in an account under your name. This is referred to as your FUND CREDIT.
WHAT IS THE “FUND CREDIT”?
The benefits of the Fund were revised with effect from 1 March 2016. The new benefits are explained below. However, it is important to note that the intention of the benefit changes is that members present as at 29th February 2016 will not be adversely affected by this change and will not be worse off on a pre-tax basis when exiting the Fund at any time up to the 2019 Election. This is explained in detail in Annexure 1 of this guide.
NOTE: The Fund’s benefits for service after the 2019 National Election must still be considered by the Independent Commission for the Remuneration of Public Office-Bearers, which will make recommendations to the President on this matter.
When you leave office and take benefits from the Fund, you will receive your FUND CREDIT. This is available to you as either a retirement benefit (if you are 50 or over) or a resignation benefit – the differences are discussed further below.
The Fund Credit is made up as follows:
- Your own contributions (7,5% of your monthly pensionable salary) made towards your retirement savings; plus
- The part of the employer contributions that is allocated directly towards your retirement – since 1 May 1999 this has been set at 17% of your monthly pensionable salary; plus
- Any amount that you may have chosen to transfer into the Fund from a previous retirement fund of which you were a member (e.g. a fund provided by your previous employer, before you became a political office-bearer); plus
- The net investment returns earned by the Fund on the investment of all these amounts.
Calculations as at 29 February 2016 are necessary for all members to determine what the opening balance in the FUND CREDIT is as at 1 March 2016. See Annexure 1 for a detailed explanation of these calculations.
This guide includes a summary of the Rules of the Fund and the insurance policies that provide certain benefits for members and their dependents. In the event of a conflict between this guide and the Rules or the insurance policies, the Rules or the insurance policies (as the case may be) will take precedence.
The information in this guide does not constitute advice by either the Board of Trustees or its professional advisors. Members are encouraged to seek expert advice from a personal financial advisor before taking decisions regarding their benefits from the Fund.
The Fund will try to ensure that the material in this guide is up to date and accurate, but this cannot be guaranteed at all times.