The MIPF is a retirement savings scheme for employees working in the metal and engineering sectors. It provides both employees and employers with a structured pension plan, helping workers save for retirement while offering tax benefits. The fund aims to provide a steady stream of income after retirement, supporting employees and their families in the long term.
Employee and Employer Contribution Rates
Employee Contributions:
Employees contribute a percentage of their pensionable remuneration (the amount that qualifies for pension deductions) every month. The contribution rates have evolved over the years. Here’s a breakdown of the contribution rates:
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Before 1 July 2012: 6.6%
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1 July 2012 to 30 June 2013: 6.7%
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1 July 2013 to 30 June 2014: 6.8%
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1 July 2014 to 30 June 2015: 6.9%
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1 July 2015 to 30 June 2016: 7.0%
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1 July 2016 to 30 June 2017: 7.1%
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1 July 2017 to 30 June 2018: 7.2%
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1 July 2018 to 30 June 2019: 7.3%
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1 July 2019 to 30 June 2020: 7.4%
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1 July 2020 to 30 June 2021: 7.5%
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1 July 2021 to 30 June 2022: 7.5%
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1 July 2022 to 30 June 2023: 7.5%
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From 1 July 2023 onwards: 7.5%
Employer Contributions:
Employers also contribute a fixed percentage of the total pensionable salary bill. Similar to the employee’s contributions, employer contributions have fluctuated over time, as listed below:
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Before 1 July 2012: 6.6%
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1 July 2012 to 30 June 2013: 6.7%
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1 July 2013 to 30 June 2014: 6.8%
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1 July 2014 to 30 June 2015: 6.9%
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1 July 2015 to 30 June 2016: 7.0%
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1 July 2016 to 30 June 2017: 7.1%
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1 July 2017 to 30 June 2018: 7.2%
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1 July 2018 to 30 June 2019: 7.3%
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1 July 2019 to 30 June 2020: 7.4%
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1 July 2020 to 30 June 2021: 7.5%
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1 July 2021 to 30 June 2022: 7.6%
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1 July 2022 to 30 June 2023: 7.7%
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1 July 2024 to 30 June 2025: 8.10%
As of 1 July 2024, employers will be contributing 8.10% of the employee’s pensionable remuneration.
How to Calculate MIBFA Contributions
To understand how MIBFA contributions are calculated, let’s go over a simple example:
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Suppose an employee earns R20.00 per hour and works 40 hours a week (5 shifts).
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The total weekly earnings would be:
40 hours x R20.00 = R800.00 -
For the contribution rate of 6.9%, the employee’s contribution is:
R800.00 x 6.9% = R55.20 -
The employer will match this contribution with an equal amount of R55.20.
Pensionable Remuneration includes regular earnings like base salary and overtime, excluding allowances or bonuses like shift allowances and holiday bonuses. It’s important for both employees and employers to understand this distinction when calculating contributions.
Tax Implications of MIBFA Contributions
Contributions to the MIPF are deducted after calculating PAYE (Pay As You Earn) or SITE (Standard Income Tax on Employees). This means that employees’ tax liabilities will be calculated before the contribution to the provident fund is deducted, which can reduce their taxable income and the tax they owe.
Voluntary Contributions
Employees also have the option to make voluntary contributions to the MIPF to enhance their retirement benefits. These contributions can be made either monthly or as a lump sum, depending on the agreement with the employer. The tax-free portion of voluntary contributions is capped at 27.5% of remuneration, and lump sum payments must be made before the end of the tax year (28 February) to qualify for tax deductions.
Bank Account Details for Contributions
To submit your contributions, payments must be made directly to the Metal Industries Provident Fund’s bank account on the same day as the contribution returns. Here are the account details:
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Bank Name: First National Bank
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Account Number: 506 000 610 43
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Branch Code: 251-305
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Branch Name: Johannesburg