Member share
Your member share is your total CRF fund value.
Let’s take a closer look at how your member share is calculated.
Contributions
The CRF is a defined contribution Fund, which means that your member contributions as well as your employer’s contributions form part of your own member share account in the Fund. (Your member share account is made up of your contributions plus your employer contributions plus monthly returns, minus general running costs of the Fund.)
You don’t pay for the retirement benefits of other members.
If you are a Municipal Employee:
- You have the choice to contribute either 7.5% or 9% of your pensionable salary depending on your service conditions
- Your employer will contribute 18% of your pensionable salary to the Fund on a monthly basis
- The monthly contributions are deducted directly from your salary and paid over to the Fund by your employer
- You will have the option of boosting your retirement savings by making additional voluntary contributions to the Fund on a monthly or annual basis. Contact your salary department to arrange for your additional voluntary contributions to be deducted directly from your salary. This will be paid over to the Fund together with your normal contributions on a monthly basis. The CRF does not have a limit to what you may contribute towards your additional voluntary contributions, however we do suggest that you speak to an accredited financial advisor to ensure you get the full benefit of tax-deductibility on your contributions
If you are appointed in terms of Section 57 of the Municipal Systems Act
- You may structure your contributions in terms of the Rules of the Fund and contribute either 25.5% or 27% of your pensionable salary
- This section is applicable to a member who is appointed as a Municipal Manager or a manager directly accountable to the Municipal Manager in terms of the Municipal Systems Act, 2000
If you are a Councillor
- You can contribute a total of 15% of your pensionable salary. The contributions will be structured as 7.5% member contribution, and 7.5% employer contribution.
- Any contributions in excess of 15% will be treated as additional voluntary contributions.
Important to remember
When you choose how much you want to contribute per month, always look at saving as much as possible towards your retirement. Legislation that came into effect 1 March 2016, allows for tax deductibility of up to 27.5% or the greater of taxable income or remuneration, up to a limit of R350 000.
Example:
Let’s say your taxable income is R10 000 per month and your total contributions towards the Fund is R 2700 per month (Your 9% and the employers 18%). This means your total retirement contributions for the year will be R 32 400.
Your annual taxable income before deductions is R120 000 (R10 000 x 12 months). The legislation as mentioned above allows for tax deductibility of up to 27.5% of the greater of taxable income or remuneration, up to a limit of R350 000. In this scenario, the total tax-deductible amount will be R33 000 (27.5% of R120 000) (Note however: the total deduction allowed may not be more than your actual contributions).
This means your total retirement contribution of R32 400 can be deducted from your taxable income.
Let’s break it down:Taxable income R120 000
Retirement Fund deduction allowed R32 400
R120 000 – R32 400 = R87 600 (This is the amount on which your tax will be calculated and not your total taxable income of R120 000)
You could pay less tax on your gross income – what a great reward for saving towards your retirement!
What other costs are deducted from my contributions?
After the deduction of the risk benefit cost, running costs of the Fund are deducted which include expenses such as administration, member education and communication, benefit counselling, auditing, valuation fees, office infrastructure expenses, levies and other general expenses.