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By Walter van der Merwe

CEO at FedGroup Life


The importance of unpacking your payslip

Payslips are some of the most important documents that you’ll receive, so it is imperative to understand what the various deductions and items on it are.


Getting a job is the first step towards financial freedom, but – as anyone who has ever received a salary will know – your cost-to-company salary and what gets paid into your account are two different figures.

The road to financial freedom requires hard work and discipline. It also requires being on top of all your money affairs.

Understanding your payslip is the start of that journey.

Let’s look at what the most common items on your payslip mean.

Cost to company (CTC):

This is the total amount of money your employer spends on you. This figure is the starting point before deductions.

Let’s have a look at the most common, deductions if you are a full-time employee.

Pay-as-you-earn (PAYE) tax:

This is the tax amount that employers deduct from your income and pay monthly to Sars. This amount is calculated on a sliding scale that depends on how much you earn.

Unemployment Insurance Fund (UIF):

This fund gives short-term relief to workers if they become unemployed or are unable to work because of maternity/adoption leave or illness. It also provides relief to the dependants of a deceased contributor. You and your employer both contribute to UIF.

Retirement contribution:

Most employers deduct an amount from your salary for retirement savings (pension or provident fund). Sometimes employees decide what percentage of their salary they want to contribute and other times the employer chooses a percentage. There is some flexibility, but you need to understand how that works, what the company has put in place for you and what your options are. Because retirement contributions are tax-deductible, it is one of the most effective ways to save.

The unfortunate reality is that very few people pay enough attention to what information is contained in their payslips and fewer still understand what every item means. Once you understand everything, check your payslip carefully to make sure it is accurate, as mistakes could be costly.

If there’s anything on your payslip you don’t understand, talk to your manager or human resources department. Don’t just leave it.

Walter van der Merwe is CEO of Fedgroup Life

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