Termination of the Management Provident Fund
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Background
The initial criterion for participation in the management provident fund (MPF) was based on a total cost salary package. The option to join the fund was offered to the employee when he/she had a salary increase. According to the agreement, the employer would apply this increase to the retirement-funding contribution. The employer then contributed the Sanlam provident fund, the Old Mutual provident fund, or the Momentum funds at work provident fund.
Because the option was offered to the employee, participation in the managed provident fund was voluntary.
Reason for termination
The participation criteria and the interpretation of the rules of the provident fund changed. Accordingly, the structured offer and acceptance process which previously allowed voluntary participation is no longer enough. This process is therefore in contradiction with the current interpretation of income tax stipulations. The rules of the provident fund in which the employer participates also changed. According to the new interpretation, the participation in the management provident fund must be compulsory for the whole group.
Provident Fund Trustees Require Compulsory Membership
The rules of the provident fund in which the employer participates under the MPF now requires compulsory membership for all employees in a designated group.
The employer’s membership to the MPF must accordingly be terminated therefore:
- Membership cannot continue on the current VOLUNTARY basis
- Employer must withdraw from respective provident funds in which it participates
- When employer participation terminates, current member participation must be withdrawn
Management Provident Fund Participant Options
At the employer’s withdrawal the participants (employees) have various options depending on the underwriter of the specific policy:
Please click on the links to see what options are available for the various underwriters:
To speak directly to a financial advisors, please phone one of our consultants: