Many teachers misinterpret the benefits one get from the Ghana National Association of Teachers (GNAT) Mutual Fund and Ghana National Association of Teachers (GNAT) Provident Fund (i.e 3rd tier pension. Other unions have theirs).
It has become clear that, most teachers wrongly explain the Association’s attributions to GNAT Mutual Fund and the GNAT Provident Fund.
Clearing the misconception and the misinterpretation, Informed Teachers Network (ITN) has taken the pain to walk teachers through some key information and features associated with both GNAT Mutual Fund and the GNAT Provident Fund.
Check below, the some difference between the two on taxation, partial withdrawal, duration of fund, waiting period to access the fund, fund management style, competition, return on savings and loan.
Income tax (17.5%) is deducted before Mutual Fund contributions while income tax is deducted after Provident Fund contributions.
This means provident fund contributors saved 17.5% on their contributions. E.g. saving GH¢82.5 into mutual fund is the same as saving GH¢100 into provident fund
You cannot partially withdraw from Mutual Fund but can partially or completely withdraw from the Provident Fund
DURATION OF FUND
Even though both funds can be kept till pension, if you want part or all the Mutual Fund, you must exit to claim your funds.
However, you do not need to exit Provident Fund to access part or all your contributions. You get to enjoy all the tax that was not deducted (17.5%) if you withdraw after 10years.
You would be taxed 15% if you Withdraw before the 10 years. Even that, it’s still better keeping the 2.5%
WAITING PERIOD TO ACCESS WITHDRAWN FUNDS
While it can take multiple months to access your Mutual Fund, it takes only week (s) to access your Provident Fund
FUND MANAGEMENT STYLE
While Mutual Fund is managed with public sector mentality, Provident Fund is managed by private companies with private sector mentality.
Mutual Fund is managed without any clear competitors/competition while Provident Fund is managed with private sector competitions since all unions/workers have their managers
RETURN ON SAVINGS
From start, the Provident Fund is ahead with the 17.5% tax that was NOT deducted.
Secondly, you get to enjoy interest on the tax that was not deducted when it’s invested for you
Thirdly, private sector competitive companies definitely produce better results than public sector create and share
Mutual Fund gives loans while Provident Fund does not.
If you must take loans from Mutual Fund, do that with minimum mutual fund contributions.