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Retirement

How retirement reforms will encourage retirement savings

National Treasury has introduced a number of policies aimed at encouraging South Africans to increase their retirement savings. In the 2013 budget, former minister of finance – Pravin Gordhan – announced a number of retirement reforms, i.e. taxation of retirement funds, compulsory preservation and on-retirement savings. Particularly significant in these reforms in the question of 'preservation', which was introduced to make sure that a person's assets are retained – in their own name – for their use during retirement. Batseta, leading industry body actively contributing towards the advancement of the retirement fund industry, breaks this concept of 'preservation' down further.

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Mandatory retirement: a gift horse with some bite

There's no prescribed retirement age in South African labour law. Each employer or sector is left to its own devices to establish its mandatory retirement age and this can be done with reference to employment contracts, company policy or even provident/retirement fund rules and regulations. For example, the furniture bargaining council set its mandatory retirement age at sixty-five. However, none of the restaurant, metal engineering, motor industry or road freight bargaining councils have set a mandatory retirement age although a number do make provision for a fund. This lack of uniformity can result in uncertainty where mandatory retirement is concerned.

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Update on 2013 retirement reforms and how these affect your compliance requirements

Retirement funds compliance

In his 2013 budget speech, minister of finance Pravin Gordhan outlined a number of retirement reforms with which you have to comply. These include: taxation of retirement funds, compulsory preservation and on-retirement savings. The compliance proposals made by Gordhan followed a series of technical discussion papers and the retirement fund industry was subsequently consulted. Here’s a summary of the proposed changes.

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Discord in retirement reform over fund trustees’ increased liability

There is a discord between calls to reduce retirement fund costs, according to the fifth discussion paper released towards the beginning of July by the National Treasury, and fund trustees’ increasing liability: trustees can be held liable, in their personal capacity, for certain fund-related events.   

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