It is to be noted however, that the fact that the Fund had no distributable surplus, does not mean that the Fund is in financial difficulties. As it were, 30 June 2003 (the EPPF’s surplus determination date) coincided with one of the worst investment periods in South Africa in many years and any surplus that the EPPF may have had before that date, was severely affected, as in many other funds. While the EPPF had no distributable surplus on 30 June 2003 for the purposes of the surplus redistribution legislation, in actuarial terms it was and still is fully funded and able to match its financial liabilities with corresponding assets.
i. Transfer a part or the whole benefit to another approved fund
You may transfer your full benefit, or a portion thereof, to another approved fund in South Africa. Approved funds are another employer’s pension or provident fund, a preservation pension fund, preservation provident fund or a retirement annuity.
Transfers to another employer’s pension fund, a pension preservation fund or a retirement annuity are tax-free. Transfers to a preservation provident fund or an employer’s provident fund are taxable.
ii. Deferring a part or the whole benefit to the EPPF Deferred Pension Scheme
You may transfer your full benefit, or a portion thereof, to the EPPF’s Deferred Pension Scheme.
You have three options on deferment:
Defer the full value of your benefit in the Deferred Pension Scheme;
Take a maximum of R25 000 of your total cash and transfer the balance to the Deferred Pension Scheme; or
Take a cash refund equal to your accumulated member contributions (less tax – taxed at the rate applicable on withdrawal) and transfer the balance to the Deferred Pension Scheme.
Each year, the EPPF will send you a Deferred Benefit Statement, which advises you of the rate of growth of your benefit in the Deferred Pension Scheme.
iii. Taking the entire benefit in cash
You may elect to take your entire benefit in the EPPF in cash. The first R25 000 is tax-free. SARS will tax the balance of the withdrawal amount at a marginal tax rate.
You may not transfer your benefit directly from the EPPF to another fund outside South Africa. If you wish to preserve your benefit in another retirement investment vehicle outside South Africa, you must withdraw the benefit and take your exit benefit in cash and then invest in another retirement funding arrangement outside South Africa.
If at any point you return to the service of Eskom or a participating employer in the EPPF after having deferred your benefit in the EPPF Deferred Pension Scheme, the benefit in the Deferred Pension Scheme will remain separate and will be retained there until you retire from the EPPF.
When returning to the service of Eskom or a participating employer, you will re-join the EPPF as a new member and your contributions will be held separately from the Deferred Pension Scheme. When you retire from the EPPF, you must also retire from the Deferred Pension Scheme.
If you wish to enhance and increase your benefit in the EPPF, you may make additional contributions to the Additional Voluntary Contribution (AVC) Scheme. Additional contributions to the AVC Scheme can be made monthly, once-off or on an ad-hoc basis, as and when you are able to make the additional contributions.
You may increase or decrease your contributions to the AVC Scheme at any time.
Additional contributions must be deducted from your salary through your payroll department and may not be deposited directly into the EPPF’s account.
Monthly and lump sum contributions to a maximum of R1 800 per annum are tax deductible. The EPPF sends members who contribute to the AVC Scheme a tax certificate each year, in respect of their contributions. The certificate reflects the contributions, interest and bonuses, if any, earned. Interest on the Scheme is declared by the Board of Trustees on a quarterly basis. Click here for the updated interest rates.
Your benefit in the AVC scheme is added to the calculation of your benefit on withdrawal, retirement or death and increases the value of your benefit.
If you wish to transfer a benefit from a previous employer into the Fund when you join the Fund, this benefit is also allocated to your AVC Scheme.
Members do not get employer contributions upon withdrawal. The calculation of the withdrawal benefit is derived from their accumulated contributions or their fair value as at withdrawal.
If you become permanently or physically disabled, or become incapacitated and are no longer able to work, you may go on ill-health retirement, subject to the recommendation of the EPPF’s Medical Panel and the approval of the Board of Trustees.
The benefit on ill-health retirement is calculated using the retirement benefit calculation formula of “Final Average Salary x Years of service (calculated in months) x Pension Rate” as follows:
The service portion of the formula is based on pensionable service accrued up to your actual date of ill-health retirement; plus
75% of the service that would have been completed from the date of the ill-health retirement to the normal retirement date. If your ill-health retirement was due to a pre-existing condition which you had before joining the employer and the EPPF, this portion of the benefit will be reduced to 50% of the service that would have been completed from the date of the ill-health retirement to the normal retirement date.
If you have ever been divorced or get divorced in future, you pension fund benefit may be impacted. When you get divorced, the settlement reached around the division of your estate, including the pension interest is between the two parties and is reflected in the divorce order. If your former spouse claims a percentage of your pension the claim against your Fund benefit is a percentage determined in the settlement reached.
All your pension benefits will therefore be calculated using your adjusted deem start date and taking into account the reduced benefit. This means that all you benefits i.e., resignation, ill-health, death benefits will now be calculated using the adjusted Deem Start Date.
You as the member of the EPPF, or your non-member former spouse can advise the EPPF of the divorce order. The following documentation must be provided to the Fund on submission of the claim:
An original, certified divorce order;
The claimant’s bank details (an original bank statement or a letter from the bank with a bank stamp;
An original certified copy of the claimant’s identity document;
A completed Form 3B, which can be obtained from here
When all documentation is completed and received by the EPPF, the divorce order is ratified by the EPPF’s Legal and Technical Services Department, the Fund pays within 60 days of receipt of all complete documentation.
The deduction of the pension interest reduces your benefit in the EPPF from the date of payment of the pension interest and this also leads to an adjustment of your Deem Start Date (your date of joining the Fund).
We cannot pay withdrawal benefits to third parties
A member can opt to go on early retirement once they turn 55 years; early retirement might have penalties so it is very important for a member planning to go on early retirement to have a discussion with their employer to discuss who will bear the penalty cost.