Cape Town – Finance Minister Pravin Gordhan has introduced a Bill that seeks to give effect to the postponement of the annuitisation requirement for provident fund members.
This comes after Cabinet decided that the new retirement reforms would see employees no longer withdrawing their provident funds as lump sums, as part of government’s aim to encourage people to save.
The Finance Minister released a statement about the decision to allow for further consultation on the proposal.
“The Revenue Laws Amendment Bill 2016 introduced today gives effect to the decision by Cabinet last week to postpone the annuitisation requirement for provident fund members for two years to allow for further consultation with key stakeholders.
“The tax benefits will continue to be implemented from 1 March 2016 for all retirement fund contributions, including for provident funds,” the Minister said.
In essence, the Revenue Laws Amendment Bill of 2016 aims to amend certain provisions of the Taxation Laws Amendment Act or 2013 [Act No.31 of 2013] in order to provide for the postponement of certain provisions in respect of taxation of retirement benefits by two years, to March 2018.
The amendment also means that contributions made by provident fund members to their funds before 1 March 2018 will not require annuatisation.
The Minister also said that to support a greater national savings effort, the National Treasury introduced Tax Free Savings Accounts last year.
He said the response has been most gratifying with about 150 000 accounts having been opened, with savings totalling R1 billion.
“For those who have not yet taken this opportunity, you have until the end of this month to take advantage of this year’s R30 000 limit for special tax treatment in these accounts,” he said.
The Minister, meanwhile, used the speech to assure public servants that the reform of the retirement system will not affect their accrued pension rights.
“Indeed, I am pleased to report that the investment portfolio of the Government Employees’ Pension Fund grew by 12.2% to R1.6 trillion in the year to March 2015. GEPF pensioners will receive a 5.3 per cent increase in April this year,” he said. – SAnews.gov.za
