Disability income benefits

The Income Tax Act precludes the PetroSA Retirement Fund from providing a disability income benefit. 

The benefits payable on your disablement are therefore provided for by a separate insurance policy that falls outside the ambit of the Fund. The Trustees of the PetroSA Retirement Fund, however, govern this separate arrangement – known as an Income Security Scheme, as it provides benefits for members of the Fund.

What is the definition of disablement? 

You will only be regarded as disabled after the first 3-month waiting period if, in the opinion of the insurer, you are unable to perform your “own occupation” due to illness, accident or injury, and you suffer a loss of income as a result.

What disability income benefit do I receive? 

In the event you become disabled, PetroSA pays your salary for up to three months while you are unable to work (assuming that you have a sufficient sick leave entitlement to cover this period). 

At the end of the 3-month period, your salary payments from PetroSA cease, and the insured monthly income benefit is payable as follows:

  • 75% of the first R31 500 of your pensionable salary plus 
  • 60% of the next R42 000 of your pensionable salary plus 
  • 50% of the next R22 350 of your pensionable salary, subject to a maximum benefit of R60 000 per month.

The maximum benefit is reviewed by the insurer annually. 

The tax treatment of this benefit is covered under “Taxation of Benefits”.

Under what circumstances does this benefit cease? 

If, at any time after the benefit has commenced, the Insurer considers you fit to return to work, the benefit will cease and you must return to work. 

In this case you must return to work and you have all the rights afforded to employees under the Labour Relations Act. In the event that PetroSA, after following due process, does not have a suitable job for you, you will be retrenched. 

If you are sufficiently disabled after 9 months of receiving the benefit, that you cannot even perform a reasonable alternative occupation, taking age, education, training, work experience and retraining potential into account, the benefit will continue until recovery, death or reaching retirement age. 

Does the benefit increase each year? 

Each year, at the end of the anniversary month of when the benefit first became payable, your disability income benefit will be increased by 6%. (If inflation is lower than 6% your increase will be limited to inflation.) 

What happens to my Fund membership? 

Importantly, you remain a member of the PetroSA Retirement Fund and you will remain an employee of PetroSA whilst you are still in receipt of a disability benefit. You will also be covered for the death benefits under the separate Group Life Assurance Scheme. 

For the purposes of the Fund benefits you have a deemed pensionable salary, which is defined to be your pensionable salary at the date you became disabled, increased by 6% p.a. (or inflation if less than 6% p.a.) referred to above. 

This means that if you were to die, your dependants would be entitled to the death benefits based on your deemed pensionable salary. Should you retire, you will be entitled to the retirement benefits also described above. During your disability PetroSA will pay contributions to the PetroSA Retirement Fund of 10% of your deemed pensionable salary as retirement savings contributions whilst you are receiving a disability income benefit. You do not have the option of varying this contribution rate.

Who pays the premiums for the group life insurance and my retirement contributions when I am disabled?

PetroSA will structure your remuneration package and pay the premium. Effectively this means that your take-home pay is reduced by this premium. 

You will also continue to pay the premiums for the separate Group Life assurance cover out of your after tax income. 

Are there any exclusions?

  • The benefits are subject to the detailed conditions set out in the group temporary disability income insurance policy. The main restrictions are:
  • The Insurer will require members that have disability cover in excess of a certain amount to provide evidence of health. If you are affected by this limit, you will be required to provide such medical evidence, or else your benefit is restricted to the amount that the Insurer pays. 
  • If you became disabled from a known cause that arose 6 months before you joined PetroSA, you will not be covered for the disability benefit until you have worked 12 months for PetroSA. This is known as the “pre-existing condition” clause. 
  • You will not be covered if your disability is the result of any self-inflicted injury. This means that if your disability is on account of any excluded event, you will not have any disability cover. 
  • To qualify for the disability benefit you must be actively at work on the first day of your employment to qualify for this cover. 

The disability income benefit will be limited to the amount paid by the Insurer. 

Do I need to provide evidence of good health?

If your annual pensionable salary exceeds R800 000 you will need to supply evidence of good health 

If you are unable to provide evidence of good health your disability cover may be limited to the amount calculated on a pensionable salary of R800 000 per annum.