THE IMPORTANCE OF MAKING VOLUNTARY CONTRIBUTIONS

VOLUNTARY CONTRIBUTIONS

Voluntary contributions are contributions which are made by the members of a pension plan in excess of their compulsory or basic contributions, which is normally 5% of the individual’s pensionable salary.

THE IMPORTANCE OF MAKING VOLUNTARY CONTRIBUTIONS

v     The more you can set aside now for your retirement, the greater your retirement benefit will be

v     Your voluntary contributions is used to secure additional pension at Normal Retirement Age

v     Your voluntary contributions are usually refundable upon termination prior to attaining Normal Retirement Age without having to forfeit the pension owed to you on behalf of the employer’s contributions if vested.

v     Pension Contributions are tax deductible. The more you contribute towards your pension, the less tax will be deducted from your salary.

             The table below highlights the tax advantages of making 

                              voluntary contributions:

	BASIC CONTRIBUTIONS 5%	BASIC + VOLUNTARY CONTRIBUTIONS 10%
Gross Salary	$2,000,000 p.a. or $166,666.67 p.m.	$2,000,000 p.a. or $166,666.67 p.m.
Pension Contributions	$100,000 p.a. or $8,333.33 p.m.	$200,000 p.a. or $16,666.67 p.m.
NIS	$24,999.96 p.a. or $2,083.33 p.m.	$24,999.96 p.a. or $2,083.33 p.m.
Income Tax Threshold	$441,168 p.a. or $36,764 p.m.	$441,168 p.a. or $36,764 p.m.
Taxable Salary	$1,433,832 p.a. or $119,486 p.m.	$1,333,832 p.a. or $111,153 p.m.
Income Tax Paid	$358,458 p.a. or $29,872 p.m.	$333,458 p.a. or $27,788 p.m.
Annual Tax Savings  by contributing 5% Voluntary		$25,000

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