Question:
What percentage of an employee's salary is allowed to be deducted to go towards their provident fund, by law?
Answer:
Amanda,
The law does not lay down the maximum allowed deduction for contributions, but the Income Tax Act stipulates that an employer may only deduct contributions for tax purposes up to 20% of the employee's pensionable salary (in respect of both a provident or a pension fund). The actual contribution rates applicable to each fund are governed by the general or specific fund rules. Some funds have a set percentage, others allow the the employee to choose the contribution rate.
The information and answers supplied in this section do not constitute advice as defined by the Financial Advisory and Intermediary Services Act, 37 of 2002.
