Pension Law Slides (8 February 2016)
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Ageing without a benefit: Taxation Laws Amendment Act 25 of 2015 and the Tax Administration Laws Amendment Act 23 of 2015 MacGregor Kufa LLB, LLM (UNISA)
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Transcript of Pension Law Slides (8 February 2016)
Ageing without a benefit:Taxation Laws Amendment Act 25 of 2015 and the Tax
Administration Laws Amendment Act 23 of 2015
MacGregor KufaLLB, LLM (UNISA)
Who is a pensioner?
Current Pension Regime
• Pension fund
• Provident fund
• Retirement annuity
Why so much hype
• With a provident fund, before the law, you could access 100 percent of your capital in cash or you could access annuity and had full flexibility;
• In the future any provident fund member will now be able to deduct their contribution so they may increase their take home slightly and at retirement they will now have to purchase annuity with up to two thirds of the contributions they have made post 2016;
What it means when you resign
What it means when you resign
• What that means is if you resign from your employment at the moment you will still get all the money from your retirement fund in cash;
• Rules around retirement funds have changed. The majority of the changes were in the 2013 and 2014 acts but were delayed with the implementation;
• The issue is people are not retiring with sufficient income even if they have spent years contributing and that’s because at the times they should be preserving funds they aren’t.
What it means when you resign
• Will I have access to my pension or provident fund if I resign or lose my job before P-day?
• Yes. This will only change when the preservation requirement becomes law. Vested rights (i.e. accumulated retirement savings before new laws take effect) will be protected and limited withdrawals will only be allowed on new contributions made after preservation becomes law.
Economic Implications
• The National Development Plan acknowledges the importance of higher savings and investments in promoting economic growth in the country;
• These savings can come from domestic and/or foreign sources. Foreign savings are an important source for domestic investment but are short-term in nature and can be volatile, thereby affecting the Rand;
• Our domestic savings have generally been very low, and therefore need to be harnessed to better promote economic growth. At an individual level, retirees will increase their chances of a financially better life in retirement;
Questions
