> Six steps to debt freedom

> Brighten their future

> Gold fever: here to stay?

> Nedbank goes green

> Evaluating performance

> Gold hits 18-month high

> Pay less estate duty

> Why lending will resume

> Positive platinum demand

> Breaking the habit

Today, 23 November 2009

Yesterday, 22 November 2009

› SACP attacks Malema

› Meteor 'flash' in Gauteng

› Malema attack 'racist'

› Govt settles with Pikoli

› Will cops play brokers?

Question:
My company does not supply me with any benefits. I do, however, contribute to a retirement annuity (RA) and medical aid. I also submit my tax returns every year.

Now my company would like to include my medical aid and RA on the payroll so that I pay less tax every month.

I understand that I would pay less tax, but how does this work if they do not contribute to these benefits at all? I am confused as to how this is to my advantage in the long run. Surely this is more beneficial to them?

Answer:
The benefit of getting a medical aid and a retirement plan is in the collective buying power of the scheme. In other words your company will be able to negotiate better rates than you would as an individual.

If they are not going to contribute in any way you cannot be forced to comply.

If they include your RA and medical aid as part of your salary package there will be some tax savings. However, if you are unsure about the benefits go and see a tax consultant with the plan your company has proposed and they will tell you if it is worth your while or not.

You should also seek the advice of an independent financial planner to get an opinion on the right way to structure your RA. Get all the documentation from your company and have it on hand to ensure the advisors have all the facts in order to compare apples with apples.

The drawback of being on a company retirement and medical aid is that when you resign you may have to find another medical aid company or move your retirement plan. So, if you do not have a long term plan in terms of your employment with them then maybe you should keep your finances independent.