KWAZULU NATAL CLOTHING INDUSTRY

PROVIDENT FUND

EXPLANATORY BOOKLET NON METRO EMPLOYEES

Prepared: 10/2016

C O N T E N T S

INTRODUCTION GENERAL MANAGEMENT OF THE FUND CONTRIBUTIONS BENEFITS Disability Death

Funeral Retrenchment Retirement

WITHDRAWAL FROM THE FUND

INTRODUCTION In this booklet we summarise the Rules, regulations and other particulars of the National Bargaining Council for the Clothing Industry (KZN Chamber) Provident Fund, now known as Kwazulu Natal Clothing Industry Provident Fund (hereinafter referred to as “the Fund”). The terms and provisions of the Fund are set out in detail in the official Rules. This summary does not replace, nor in any way modify, the official Rules of the Fund.

Anyone who earns an income should also provide for their future financial security. Considering your circumstances and the work that you do, four things could happen in the future:

You could continue working for your Company until the day you retire;

You could leave your present job;

You could become sick or have an accident;

You could become disabled or even die. This booklet describes how the Fund provides for you and your family in each of the above cases. Remember: the main purpose of the Fund is to provide retirement and other benefits for employees and their beneficiaries in the event of death. The Fund was previously governed by the Registrar of Labour, in terms of the Labour Relations Act, 1995. The rules, benefits and contributions to the Fund are negotiated between the employer and the employee body. The employee body is represented by the Southern African Clothing and Textiles Workers’ Union (SACTWU) With effect from 5 May 2008, the Fund is now governed by the Pension Funds Act, in terms of Pension Funds Act, No. 24 of 1956. The Fund will continue to operate under the framework of both the Pension Funds Act and, where applicable, the Labour Relations Act.

In the event of a discrepancy between this booklet and the Rules of the Fund, the Rules will take precedence.

GENERAL When was the Fund established? The Fund was started in 1961 to give workers in the Clothing Industry in Natal Metro Region benefits when they retire, are disabled or die. The Fund has, since its start, built up funds to assist members when they retire. For many years contributions were very low and this has meant the benefits were also low. The rules of the Fund were amended to incorporate the employees of the Non Metro region on 19 December 2005, where the employer shall contribute 4% of weekly basic wage less R1.21. As from 1 October 2008, where a ballot had taken and the employees agreed to pay 4% of weekly basic wage, these employees were covered for risk benefits. With effect from 1 September 2016, all employees in Non Metro region shall contribute 4% of their weekly wage to the Provident Fund. They will now also be covered for risk benefits.

What type of fund is it? The Fund is a defined contribution provident fund. In other words, the benefits are determined by the contributions to the fund and the investment earnings on those contributions.

Who are the members of the Fund? ALL Non-Metro employees in the Clothing Industry who fall under the Bargaining Council agreement are required to be members of the Fund. No new employees who are aged 60 and over are allowed to join the Provident Fund.

MANAGEMENT OF THE FUND

Who manages the Fund? With effect from 5 May 2008, the Fund became a B-type umbrella fund sponsored by the National Bargaining Council for the Clothing Manufacturing Industry and regional predecessor the Industrial Council for the Clothing Industry (KZN). The Fund is managed by a Board of Trustees consisting of six Trustees. 50% of the Board shall be elected by members of the Fund. Three Trustees are from SACTWU and three from Employer Associations (representatives from the South African Clothing Manufacturing Association – SACMA and Apparel & Textile Association of South Africa – ATASA). The administration, management and control of the Fund vests with the Trustees. The Trustees rely on professional Employee Benefit Consultants and Asset Fund Managers, to give them specific advice and assist them in the management of the Fund.

CONTRIBUTIONS

What are the contributions to the Fund? For Non Metro employees, you will pay 4% of weekly basic wage which goes directly to retirement savings. For Non Metro employees, your employer pays 4% of weekly basic wage less R1.21 of which 2.75% goes to retirement savings and 1.25% pays the costs of providing additional benefits to you and your dependants in the event of you becoming disabled or dying.

What is the fund credit? This is the accumulated contributions that have, over the years you have been a member of the Fund, been allocated to your individual retirement benefit. Your accumulated credit would be made up as follows:

Member's contributions,

Company contributions after the deduction of expenses,

Voluntary contributions / monies from other Fund (if applicable); and

Interest that these contributions earn.

How do I know how well my share is growing? Every year you will get a statement showing the benefits you are entitled to.

If you have been in the Fund for many years, you will notice the retirement benefit grows from one year to another. The longer you pay into the Fund, and the longer the money stays in the Fund, the bigger the payout is when you retire or withdraw from the Fund. You should, therefore, not withdraw your benefits, unless you permanently leave the industry. Every time you withdraw your benefits, your contributory service starts anew. This means you will have less benefits when you retire.

BENEFITS

Why should I pay toward a Provident Fund? When you retire you will no longer get a weekly wage or monthly earnings. The money you have saved during your working life in the Provident Fund can then be used for living expenses.

What are the advantages of being a member now? One of the advantages of being a member is that the money you pay into the Fund is being managed by some of the best investment managers, and so grows at a rate faster than it would if invested in a normal bank account. Your contributions allow you to save a little each month over the years to provide for your retirement. Another advantage is that the Provident Fund also provides for a contributory member a lump sum benefit if you are permanently disabled and if you die, a lump sum benefit is paid to your dependants. Your Provident Fund provides the following benefits:

DISABILITY BENEFIT

When would the disability benefit be paid? The disability benefit is paid if you have to permanently stop work because of illness or injury, whether the injury occurred at work or at home.

How would I qualify for the disability benefit? To qualify for the disability benefit, you must first of all be so seriously ill or injured that you are permanently disabled. If this is the case, you would need to approach your Employer and the Fund to apply for disability benefits. Your application will then be sent, with medical evidence, to the insurer. If they consider you totally and permanently disabled, you will receive a lump sum benefit.

If I apply for a benefit, how long would I have to wait for payment? You do not need to wait for any length of time before applying for the benefit. Once you have applied, however, you must wait 6 months before the Insurer will pay out your benefit, even if your claim is valid. If you have applied for disability benefits, you will be covered for death benefits during the waiting period (6 months).

How much will I receive if I am disabled? The disability benefit currently is made up of two parts:

Your Fund Credit

A lump sum of 1 times annual earnings or 52 times weekly basic wage which is payable by the insurer.

If the Insurer accepts your claim, you will receive a lump sum benefit equal to the amount the Fund has insured the benefits for. NOTE

Your employer must be up to date with the payment of the risk premiums.

A claim must be lodged with the insurer within 9 months from date of disability.

The disability benefit will end at age 60.

The amount of disability benefits reduces proportionately from the age of 55-60 (at 20% per year over 55).

DEATH BENEFIT IN SERVICE When is the death benefit paid? The Fund will pay a benefit if you are a Fund member, are currently employed in the industry, and die before retirement age (i.e. 60). If you leave the Fund before the age of 60, you will be covered for death benefits for one more month. During this period you may also choose to take out an insurance policy with the Insurer without having to go for extensive medicals.

To whom is the benefit paid? It is important that you nominate your dependants and / or beneficiary (ies). This is necessary so that, in the event of your death, the Trustees will be aware of your wishes in respect of the benefits due, and to whom they should be paid. Please ensure that you complete and forward a beneficiary form to Council nominating your dependants and / or beneficiaries. Dependants will usually be paid regardless of whether they have been nominated or not. Beneficiaries will only be paid out if the member has nominated them in writing. The following factors are taken into account when effecting a distribution. - The amount available for distribution - The beneficiary’s relationship with the deceased - The beneficiary’s financial status - The beneficiary’s future earning capacity - The age of the beneficiary Therefore, it is very important for you to nominate your dependants and beneficiaries and inform the Trustees in writing. This will help the Trustees to make their decision when allocating the death benefits to your dependants and/or beneficiaries.

How much will the death benefit be? The death benefit currently is made up of two parts:

Your Fund Credit

A lump sum of 1 times annual earnings or 52 times weekly basic wage which is payable by the insurer.

NOTES

Your employer must be up to date with the payment of the risk premiums.

A claim must be lodged with the insurer within 12 months from date of death.

Is there a waiting period on a death benefit? No. The sooner the death benefit application is submitted, the sooner the benefit can be paid out. However, if there are no dependants, the beneficiaries may be asked to wait 12 months before the payment of the benefit. This is to ensure that no dependants that the Trustees are unaware of are excluded from their entitlement to a portion of the benefit.

BEREAVEMENT BENEFIT

In terms of the Rules, funeral benefits will now be referred to as Bereavement Benefits and will assist with the funeral expenses. The arrangement of this benefit has changed – a funeral benefit of R2500 is payable. What is the Funeral Benefit about? This benefit helps to pay for funeral expenses should a qualifying member pass away. There is no cover for your spouse, children, parents and extended family.

What is the waiting period on the Funeral Benefit? As with the death benefit, there is no waiting period on the funeral benefit, as the object of the funeral benefit is to help pay the costs of the deceased’s funeral. The sooner the application is submitted, the sooner the benefit can be paid.

WITHDRAWAL FROM THE FUND When is the withdrawal benefit paid to me? If you leave the Clothing Industry but do not retire, you will become entitled to a withdrawal benefit.

What is the waiting period on the Withdrawal Benefit? If you have not found work within the Industry, after 6 months you will be paid a withdrawal benefit.

What would the withdrawal benefit be? Your Fund Credit This benefit will be subject to tax, according to the tax laws applicable at the time of your withdrawal, plus any legal cession still in force at the date of your withdrawal.

Claim your benefits? If you have not worked in the clothing industry for last 6 months and not claimed your benefit, please apply at one of our offices.

RETRENCHMENT BENEFIT When am I entitled to a retrenchment benefit? If you leave the Clothing Industry but do not retire, and it is because of a retrenchment exercise by your Employer, and you are unable to find work within the Clothing Industry within 3 months, you will be paid a retrenchment benefit.

What is the waiting period on the retrenchment benefit? If you have not found new employment within 3 months of being retrenched, you will be paid a retrenchment benefit.

What is the retrenchment benefit?

Your Fund Credit

This benefit will be subject to tax, according to the tax laws applicable at the time of your retrenchment, plus any legal cession still in force at the date of your retrenchment.

RETIREMENT BENEFIT When will I receive a retirement benefit?

The Normal Retirement Age is 60, and you qualify for your retirement benefit at that age. You may, however, also apply for retirement benefits under the following circumstances:

From age 55,

Later than age 60, if the Employer agrees that you may continue working after that age,

Before age 60, should you be too ill to work, subject to the Trustees’ approval.

How much will I receive when I retire?

Your Fund Credit

How will I receive my benefit? You will receive your full Fund Credit as a cash lump sum, after tax has been deducted according to the tax laws at the time of your retirement, as well as any legal cession still in force as at that date.

Is there a waiting period before I can apply for my benefit?

No. You can apply for your retirement benefit as soon as you qualify for it. It may, however, take a few weeks to process the benefit and pay it out to you.

NOTES