The following table sets out the pension increases granted over the past 12 years to Defined Benefit pensioners.

 

Date of increase	Defined benefit % increase	Year on year “headline inflation” to previous 30 June
1.1.2000	7.30%	7.22%
1.1.2001	6.30%	5.16%
1.1.2002	7.00%(1)	6.31%
1.1.2003	9.40%	8.00%
1.1.2004	5.03%(2)	6.71%
1.1.2005	2.81%(3)	1.23%
1.1.2006	5.00%	2.86%
1.1.2007	5.00%	4.87%
1.2.2007	Min. of 15.00% (4)	n/a
1.1.2008	7.50%	7.04%
1.1.2009	12.20% (5)	12.17%
1.1.2010	6.89%	6.89%
1.1.2011	5.00%	4.21%
1.1.2012	7.00%	5.00%
1.1.2013	7.00%	5.5%
1.6.2013	3.09% (7)	N/A
1.1.2014	7.16%	5.57%
1.6.2014	5.49% (8)	N/A
1.1.2015	6.75%	6.61%
1.1.2016	4.75%	4.74%
1.5.2016	6.00% (9)	N/A
1.1.2017	6.30%	6.27%

Notes:

1. This increase averaged 7.00%, but was expressed as an increase of 6.30% plus an additional pension of R264 per annum. 
2. This increase is 75% of headline inflation to the preceding 30 June. For pensioners that retired before 1/1/1980 the increase is 5.36% (i.e. 80% of inflation). 
3. For pensions that came into payment before 1 January 1980, the increase is 2.49%. (Note: Pension increases in excess of inflation were granted with effect from 1 January 2005 to make up for the low increases as at 1 January 2004, which were constrained to the minimum increase of 75% (80%) of headline inflation owing to poor investment returns at that time). 
4. The financial strength of the DB pensioner pool resulted in special increases being granted with effect from February 2007, with the approval of the Employer. The special increase consisted of a “parity” increase (uplifting pensions that commenced in earlier years to the level that would apply if the current pension benefit formulae were used), a 15% increase and an increase to ensure that each household was receiving at least R1 000 p.m. – the minimum increase was thus 15.0% and the weighted average increase granted was 21.4%. 
5. Initially an increase of 9.13% (9.74% for pensioners that retired before 1/1/1980) was granted. This was “topped up” to a full inflation increase, i.e. 12.2% for all DB pensioners, in October 2009, backdated to 1 January 2009. 
6. This figure of 6.89% is the year-on-year change in the “new headline CPI” index for the year to June 2009.
7. This is the (minimum) special increase granted as at 1 June 2013 by the Trustees, funded by the 2012 Defined Benefit pensioner surplus.  The increase was only granted to pensions in payment as at 30 June 2012.  Only 12 of the pensions in payment as at 1 June 2013 did not qualify for the special increase.
8. This is the (minimum) special increase granted as at 1 June 2014 by the Trustees, funded by the 2013 surplus. The increase was only granted to pensions in payment as at 30 June 2013. Only seven of the pensions in payment as at 1 June 2014 did not qualify for the special increase.
9. This is the (minimum) special increase granted as at 1 May 2016 by the Trustees, funded by the 2015 surplus. The increase consisted firstly increasing the spouses’ and orphans’ pensions in payment by a factor of two-thirds divided by 65%, i.e. 66.67% / 65% or 1.0256. The minimum household pension was then increased from R2 500 per month to R3 000 per month. Lastly, pensions that were in payment as at 30 June 2015 and were still in payment as at 1 May 2016 were increased by 6%, but where this resulted in an increase in the monthly pension of less than R475, the monthly pension was increased by R475. Only eight of the pensions in payment as at 1 May 2016 did not qualify for this last part of the special increase as their pensions commenced after 30 June 2015. The average increase granted as at 1 May 2016 was 10.95%.
   

    

With effect from 1 July 2008, the following enhancements took place:

• An increase to the pension payable to a spouse on the death of a member (in-service and after retirement) from 60% to 65%. This included a parity adjustment for existing spouse and child pensioners, where applicable.

   

• A 15% accrued benefit enhancement to Defined Benefit in-service members, via the granting of additional years of service to February 2007.

   

• A 15% pension increase to those members who retired after February 2007 and therefore did not qualify for the special increase granted with effect from that month. This increase was backdated to the actual date of retirement.

   

These benefit improvements used up a part of the surplus that existed in the Defined Benefit section at 30 June 2007.

 

With effect from 1 May 2016, the following enhancements took place:

• An increase to the pension payable to a spouse on the death of a member from 65% to 66.67%.

• The minimum household pension was increased from R2500.00 to R3000.00.

• Pensions that were in payment as at 30 June 2015 and were still in payment at 1 May 2016, were increased by 6%, but where this resulted in an increase in the monthly pension of less than R475, the monthly pension was increased by R475.

These benefit enhancements were funded by the 2015 surplus.

What contributions do members pay?

Members that joined the Fund on or after 1 January 1977 contribute at a rate of 8.5% of pensionable salary.

Members that joined the Fund before 1 January 1977 contribute according to the following table:

Age last birthday at entry	Member contribution as % of pensionable salary
Up to 26	7.25%
27 to 30	7.75%
31 to 33	8.25%
34 to 54	8.50%

What contribution does the City of Cape Town pay?

The City of Cape Town pays the balance of the cost to provide the specified benefits in terms of the Fund Rules (subject to the maximum City of Cape Town contribution rate set out in the Fund Rules).

The current City of Cape Town contribution rate is 18% of pensionable salary.

What is the definition of pensionable salary?

The amount of your salary that is regarded as pensionable will be set out in your employment contract.

Can I buy back service?

The Fund Rules allow you to buy-back service to age 16, provided that the maximum number of years of service you may buy-back in this fashion is 10 years.

The Fund will determine on an actuarial basis the amount of money you would need to pay into the Fund to buy back such service.

At what age can I retire?

The following table sets out the latest age at which you must retire (unless City of Cape Town agrees otherwise) and the earliest age from which you may retire (unless the Fund considers you to be in ill-health in which case you may retire at any age):

 

Category of employment	Date of entry	Normal retirement age	Earliest retirement age *
Fireman	Prior to 1.1.1958	58	55
	1.1.1958 to 31.12.1973	60	55
	On or after 1.1.1974	63	55
Other members		65	55

* Note that your pension may be reduced if you retire early (see below).

Your employment conditions will set out the notice period you need to give City of Cape Town if you wish to retire before your normal retirement age.

What is my retirement benefit?

Your retirement benefit consists of two components, namely:

• A pension calculated as 1/51 x years and months of pensionable service x average pensionable salary earned over the 12 months prior to your retirement.

  This pension will be paid monthly, with a 13th pension being payable in November each year. Please note that you only receive a pro-rata 13th cheque in the first year of your retirement, i.e. if you have only been on pension for 3 months by November you will receive a bonus of 25% of your pension

  And 

• A lump sum (or gratuity) calculated as 7% x years and months of pensionable service x average pensionable salary earned over the 12 months prior to your retirement

  The pension and gratuity may be reduced if you retire before your normal retirement age.

Alternative formula

As an alternative to receiving a pension and a gratuity at retirement, you may elect to receive your full retirement benefit as a pension in which case your benefit is calculated as:

• 4/153 x years and months of pensionable service x average pensionable salary earned over the 12 months prior to your retirement. This pension will be paid monthly, with a 13th pension being payable in November each year.

The pension is paid from the Fund

At this time the pension benefit you receive is paid directly from the Fund - you do not have the option to secure your pension from an Insurer.

What reduction applies if I retire early?

If you completed 40 years of pensionable service by the time you retire you may retire early without any reduction. (Please note that any pensionable service you bought back does not count as pensionable service for the purpose of applying this Rule.)

If you retire with less than 40 years actual pensionable service your pension and gratuity benefit will be reduced by 0.2% for each month between the date you retire early and the earliest date your could retire without reduction.

 

If City of Cape Town certifies that your employment has been terminated due to ill-health and a medical board confirms that you are unable to continue working on account of sickness or injury that is not self-inflicted, you will be allowed to retire at any age.

Your benefit will be:

(a) A lump sum and monthly pension:

• A pension of 1/51 x years and months of pensionable service x average pensionable salary earned over the 12 months prior to your retirement. This pension will be paid monthly, with a 13th pension (pro-rated for the first year) being payable in November each year; plus

 

• A gratuity of 7% x years and months of pensionable service x average pensionable salary earned over the 12 months prior to your retirement

No reduction factor is applied to this benefit.

What benefit do I receive on resignation?

If you resign before reaching normal retirement age, you will receive a withdrawal benefit in cash equal to the greater of:

• Your minimum benefits as defined in the Pension Funds Act and

• cash lump sum equal to your own contributions up to 30 November 2003 plus 4% p.a. of such amount for each complete year up to 30 November 2003 by which contributory service interest exceeds 5 years.

For example if you have completed 6 years of pensionable service and your contributions total R30 000 your benefit will be R31 200 (i.e. R30 000 x (1 + (6-5) x 4%))

You have the option of receiving either:

1. The cash lump sum benefit described above; or
2. To become a deferred pensioner of the Fund

If you elect to become a deferred pensioner, you will not receive any benefit at this time. When you reach your normal retirement age you will receive a pension and a gratuity calculated as:

• Pension benefit: 1/51 x years and months of pensionable service completed at time of resignation x deemed average pensionable salary 
• Gratuity benefit: 7% x years and months of pensionable service completed at time of resignation x deemed average pensionable salary

Your deemed pensionable salary is your pensionable salary at date of resignation increased each year on 1 January in line with the pension increase granted to pensioners.

 

What benefit do I receive on dismissal?

If you are dismissed you will be entitled to the same benefit that applies on resignation, as described above.

Notes:

• Subject to the provisions of the Pension Funds Act, City of Cape Town may be able to recover money from your benefit if your dismissal is a result of theft or fraud.

What is my retrenchment benefit?

If City of Cape Town certifies that your employment has been terminated due to redundancy or re-organisation or the transfer of your business unit as a going concern to another institution or body you will be allowed to retire. Your benefit will be:

• A pension of 1/51 x years and months of pensionable service completed up to the date of retrenchment x average pensionable salary earned over the 12 months prior to your retirement. This pension will be paid monthly, with a 13th pension (pro-rated for the first year) being payable in November each year; plus
• A gratuity of 7% x years and months of pensionable service completed up to the date of retrenchment x average pensionable salary earned over the 12 months prior to your retirement No reduction factor is applied to this benefit.

DEATH OF AN ACTIVE (IN-SERVICE) MEMBER

The benefit your dependants will receive

If you die in service on or before you reach your normal retirement age, your dependants will receive a benefit equal to:

• A lump sum (or gratuity) benefit calculated as 7% x years and months of pensionable service completed up to the date of death x average pensionable salary earned over the 12 months prior to your death. 
  (This benefit is subject to a minimum of 25% of your pensionable salary at date of death).

• A pension payable to your surviving spouse equal to 66.67% (two thirds) of the pension you would have been entitled to had you retired at normal retirement date, had you not died (using the same formula as for retirement)

   

• A pension payable to your surviving children - if you are survived by one child this child will receive a pension equal to 26.67% of the pension you would have been entitled to at normal retirement date, had you not died.

   

  If two or more children survive you, they will receive a combined pension equal to 40% of the pension you would have been entitled to at normal retirement date, had you not died.

   

  These pensions would double if there were no eligible spouse. The pensions are payable to your children until the earliest of them reaching age 21, dying or marrying.

The pension your dependants receive will be subject to the same conditions as a retirement pension, i.e. a 13th pension is paid each year in November (pro-rata for the first year) and an increase will be granted on 1 January each year.

If you have no spouse or eligible children

If on your death you have no spouse or eligible children, your dependants (or your estate if you have no dependants) will receive a benefit equal to the greater of:

• your minimum benefits; or

• twice the amount of your resignation benefit; or

• A lump sum (or gratuity) benefit calculated as 7% x years and months of pensionable service completed up to the date of death x average pensionable salary earned over the 12 months prior to your death. (This benefit is subject to a minimum of 25% of your pensionable salary at date of death).

To who will this benefit be paid?

In terms of the Pension Funds Act, the Trustees are obliged to apply your lump sum death benefit to the persons most financially dependent on you.

To assist the Trustees in this regard you should complete a beneficiary nomination form (click here to complete the Beneficiary Nomination form). Please note that whilst the Trustees will take you nomination form into account they are not bound to follow it.

DEATH OF A PENSIONER

The benefit your dependants will receive

If you die after retirement, your spouse will receive a benefit equal to:

• A lump sum (or gratuity) benefit calculated as 1/12th (one twelfth)  x average pensionable salary earned over the 12 months prior to your death. This benefit is subject to a minimum of 25% of your pensionable salary at date of death; and

• A pension payable to your surviving spouse equal to 66.7% of the pension you would have been entitled at normal retirement date.

If you die after retirement, your eligible children will receive a benefit equal to: 

• If you are survived by one child this child will receive a pension equal to 26.7% of the pension you would have been entitled at normal retirement date had you not died.

•  If two or more children survive you, they will receive a combined pension equal to 40% of the pension you would have been entitled at normal retirement date had you not died.

   

  These pensions would double if there were no eligible spouse. The pensions are payable to your children until the earliest of them reaching age 21, dying or marrying. 

The pension your dependants receive will be subject to the same conditions as a retirement pension, i.e. a 13th pension is paid each year in November (pro-rata for the first year) and an increase will be granted on 1 January each year.

If you have no dependants

If on your death you have no spouse or eligible children, dependants or your estate (if you have no dependants) will receive a benefit equal to the excess (if any) of:

• twice the amount of your resignation benefit at your date of retirement, over

• the total payments you received on retirement

To who will this benefit be paid?

In terms of the Pension Funds Act, the Trustees are obliged to apply your lump sum death benefit to the persons most financially dependent on you. 

To assist the Trustees in this regard you should complete a beneficiary nomination form (click here to complete the Beneficiary Nomination form). Please note that whilst the Trustees will take you nomination form into account they are not bound to follow it.