Voluntary superannuation contributions legitimate, says Nasfund officer

By PETER ESILA
VOLUNTARY superannuation contributions are legitimate, says Nasfund chief financial officer Rajeev Sharma.
He said a lot of the employers asked this common question.
“Employee contribution is always after tax,” he said.
“Six per cent is mandatory and there is no limit to the upside, because employee part of the contribution comes after you pay your taxes. Whatever is left is taxes.
“Up to 6 per cent is the minimum unit to contribute but you can contribute more, it all depends on your financial individual situation.
“If you want to contribute more, you can contribute more.”
Sharma said that according to the Superannuation Act and the Income Tax Act, the salary sacrifice had not changed.
“Superannuation Act says that 8.4 per cent needs to be contributed voluntary by employee and employer, and you can’t change that,” he said.
Superannuation Act does not put any limit on the higher contributions you need to make.
“If the employer wants to make 30 to 50 per cent, they can make it.
“So where is the issue?
“The issue is the Income Tax Act: Section 88 of the Income tax Act says only after 15 per cent of the taxable salary is allowed.
“You need to know how to calculate that 15 per cent of the taxable salary. As long as the employer contribution is up to 15 per cent of the salary, it is all good.”
Sharma urged employers and employees to contribute as much as they could to superannuation.
“That is what’s going to save you when you retire,” he said.