Nanka amazwibela aloluhlelo oluhlongozwaa uhulumeni. Government is aligning the benefits of provident funds to those of pension and retirement annuity funds at retirement. This means that provident fund members will be required to convert at least two thirds of their retirement savings into an annuity or pension when they reach retirement, instead of a once-off large sum of cash. Further, members of provident funds will also enjoy the same tax deduction on their own contributions as currently applied to contributions by pension fund members, enabling them to potentially take home a slightly higher monthly salary. **We encourage members of both pension and provident funds to preserve their savings. However, provident members will be able to take all their retirement savings as a cash lump sum upon resignation (with tax implications), or to preserve it with a financial institution, or old or new employer (no tax implications). **Reasons behind the reforms:To help retirees from provident funds to better manage longevity risk (i.e. the risk of outliving your retirement savings when in retirement) and investment risk (the risk of up and down movements of market prices in securities), and prevent them from spending their retirement assets too quickly and becoming excessively reliant on the State or their families for support. **For more info or to get clarity on the reforms you can go to this link:treasury.gov.za/publications/RetirementReform/
Posted on: Tue, 19 Aug 2014 06:24:31 +0000
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