Employers have the opportunity to encourage their employees to save & invest money. Employees who have financial problems are not productive. The 2017 PwC report shows that 46% of employees with financial challenges spend about 3 hours a day thinking about or addressing financial issues. Having savings & investment accounts would help employees to have a buffer in case of an emergency or crisis and to avoid getting into short-term expensive debt.
How employers can help their employees to save & invest money
Employers can encourage and facilitate the opening of Tax-Free Investment Accounts. Each employee would contribute from a minimum of R500 to a maximum of R2 750 per month. The actual amount each staff member contributes would be their own decision. The contribution would be deducted directly from the employee’s salary. Salary deductions will make it easy for more employees to join the company savings & investment scheme. The scheme is voluntary but there must be a minimum of 5 people in the company who are interested for us to open the investment account in the name of your company.
When can your staff members withdraw the funds?
Anytime they need the money but I would suggest that they only withdraw the money in January for school or university fees, or for Black Friday purchases so they don’t use credit for such purchases. They can also use the account to save for a deposit for a home or a car, etc… Tax-free investment accounts are most suitable for long-term needs such as saving for university fees for your children. There is no minimum lock-in period so they can withdraw the funds as and when they need to. At the moment, Sanlam is planning to do a BEE deal where they want to sell 5% of their stake by the end of 2018 and there will certainly be other deals in the near future. Qualifying employees who have savings and investment accounts would be in a better position to take part in such schemes.
Why tax-free investment funds?
- No performance fees
- No Income tax, No Dividend Withholding tax, No Capital Gains Tax so all the growth is for the benefit of the investor
- Suitable for medium to long-term needs
Where will the funds be invested?
Your funds will be invested in line with each Employee’s Risk Profile. Currently, ThuthukaSA can help you to invest the funds with either Allan Gray, Sygnia, PPS and Sanlam. We will advise on the best investment company to use based on the profile of your employees
How much is ThuthukaSA charging you to open the investment account?
Initial fee: 1,5% (excl. VAT) deducted with each payment
Annual fee: 1,5% (excl. VAT)
On R500, our fee would be R7,50
On R1 000, our fee would be R15
Who can I contact if I want to join or if I have more questions?
Phone ThuthukaSA offices @011 568 2635 / 011 568 7692 or email firstname.lastname@example.org