{"id":140639,"date":"2021-08-19T06:29:35","date_gmt":"2021-08-19T06:29:35","guid":{"rendered":"https:\/\/www.regenesys.net\/reginsights\/?p=140639"},"modified":"2022-09-09T13:20:59","modified_gmt":"2022-09-09T07:50:59","slug":"the-abc-of-tax-on-retirement-products-2","status":"publish","type":"post","link":"https:\/\/www.regenesys.net\/reginsights\/the-abc-of-tax-on-retirement-products-2","title":{"rendered":"The ABC of Tax on Retirement Products"},"content":{"rendered":"

So, you\u2019ve studied hard, obtained your degree, landed your first job, got the car and the rented apartment.\u00a0 The world is your oyster! You\u2019re young and not thinking far ahead about retirement.<\/p>\r\n\r\n

Whilst driving around, singing at the top of your lungs to your favourite tune, you see again in your mind\u2019s eye the vision of your first payslip. The amount described as \u201cgross\u201d, is pleasing to the eye.\u00a0 Then there is an amount printed next to \u201ccost to company\u201d, which looks even better.<\/p>\r\n\r\n

You recall grabbing your cell phone, but only for its calculator, and calculated the difference.\u00a0 Why is there a difference?\u00a0 You notice a description for \u201cProvident Fund contribution\u201d.\u00a0 A-ha!\u00a0 That is the bulk of the difference.\u00a0 If only that amount was added into your net salary, you could have ordered leather seats and the mag wheels.\u00a0<\/p>\r\n\r\n

Saving for retirement might seem almost as boring as staying indoors on a Friday night, but it\u2019s the savviest decision you can make in your early years of work.\u00a0 And, as a bonus, you save in taxes too!<\/p>\r\n\r\n

Let us explain the concept of saving for the future, whilst also saving income tax.\u00a0 To illustrate the advantages, we will introduce you to the various products available for saving for retirement and the tax benefits attributable to each. We will focus on the more traditional products and introduce you to endowment policies as an exciting option!<\/p>\r\n\r\n\r\n\r\n

\"Tax<\/a><\/figure>\r\n\r\n\r\n\r\n

Pension funds<\/h2>\r\n\r\n

You can only contribute to a pension fund through your employer company and membership is often compulsory.\u00a0 Pension funds are managed by appointed trustees, who decide which assets to include in the fund.<\/p>\r\n\r\n\r\n\r\n

Tax saving because of pension fund contributions<\/h3>\r\n\r\n

Most employers structure their employees\u2019 packages in such a way that the employer pays a portion towards the pension fund.\u00a0 The portion contributed by the employer is taxed as a fringe benefit.\u00a0 A fringe benefit is a benefit granted by an employer, which you do not receive in cash, but it is included in your taxable income.<\/p>\r\n\r\n

\u00a0<\/p>\r\n\r\n

However, upon calculating the portion which serves as a deduction for calculating your Pay-As-You-Earn (\u201cPAYE\u201d = income tax on your salary), the fringe benefit portion is added to your own contribution.<\/p>\r\n\r\n

The deduction which may be deducted for purposes of calculating PAYE, is limited to 27.5% of the greater of:<\/p>\r\n\r\n\r\n\r\n