GEPF employee: Do I retire or resign?
RETIRE OR RESIGN WITH GEPF:
GEPF has very strict rules about the benefits it must pay to its members, pensioners and beneficiaries. These rules are set out in a law (an Act of Parliament, approved and signed into law by the President) called the Government Employees Pension (or GEP) Law or the Regulations as negotiated in the Public Service Coordinating Bargaining Council (PSCBC) for post-retirement medical benefits. This Law and its rules explain how GEPF must collect money from contributing members and employers, how this money must be invested and how it must be paid out to those who are eligible for benefits.
GEPF is a defined benefit fund and your benefits are guaranteed. GEPF is a defined benefit fund. This type of pension fund is different from the pension funds offered in most of the private sector (you can choose to belong to a defined benefit fund in the
private sector as well, but it is not the norm). In GEPF, the type of benefit you will receive is not based on how much money you and your employer contribute, with interest, and when the money is finished there is nothing left for you. Instead, in GEPF your benefit is calculated based on formulas specified in the rules, and the benefit is determined on an exit factor, the number of service years you have, and your final average salary over the last two years of your employment.
Resignation rather than retirement – WHAT YOU CAN LOSE
GEPF has different benefits if you resign from government service rather than retiring. If you have more than 10 years of service and you decide to resign rather than retire, you will lose the following benefits offered by GEPF:
Monthly pension
You will only receive a once-off lump sum payment, called a gratuity, rather than receiving your lump sum and monthly pension, called an annuity (which is for life). Your spouse or life partner will also not receive anything from GEPF after you pass away, whereas they would have received 50% or 75% of your monthly pension, based on your choice on retirement, for as long as they live.
Medical aid subsidy
You will not receive any contribution towards your medical aid from the state if you resign. If you have 15 or more years of service, you may have been eligible to receive a government subsidy towards your monthly medical aid membership for the rest of your life if you had chosen to retire as per the conditions set out in the PSCBC resolutions. If you have less than 15 years’ service, you may have received a once off medical benefit (the amount payable depends on whether you have less than five years’ service, less
than 10 years’ service, or less than 15 years’ service). These all fall away when you resign.
Funeral benefit
GEPF pays a funeral benefit to help its members and pensioners pay the funeral costs when a GEPF member or pensioner dies. These benefits are also paid out on the death of the spouse, life partner or eligible child of a member or pensioner. This benefit consists of R7 500 for the funeral of a member or pensioner. The same amount is also payable for the funeral of a member or pensioner’s spouse or life partner. For the funeral of an eligible child of a member or pensioner, the benefit is R3 000. This benefit is not paid if you resign.
IF YOU RESIGN INSTEAD OF RETIRING:
NO monthly pension
NO medical assistance
NO funeral assistance
The choice is yours, but think and be informed Before you resign rather than choosing to retire with GEPF, think about all of the options that you have and the benefits that you will lose. As a GEPF member, whether an active member or pensioner member, you will never receive less than the benefits that you qualify for according to the law and the rules.
Don’t let anyone fool you about your benefits: be informed. If you are not sure about something, contact GEPF directly on 0800 117 669 or visit your nearest Regional Office.