What does the Retirement Reform mean for you and your employees?
The Taxation Law Amendment Act of 2020 was signed into law by the President on 20 January 2021. This has enacted the long-awaited legislation which provides for the same annuitisation rules that apply to members of pension funds, pension preservation funds and retirement annuity funds, to be applied to members of provident funds and provident preservation funds, after 1 March 2021. This forms part of the Retirement Reform.
Retirement Reform is a process whereby government, through policies, seeks to encourage employees to save and provide adequately for retirement to ensure that they retire comfortably and have income that lasts for the duration of their retirement.
What are vested benefits?
Vested benefits are the retirement savings and interest before the new legislation becomes effective and, implies a right thereof.
Vested rights will be given to existing provident and provident preservation fund members on 1 March 2021 and these vested rights will remain intact until retirement, even if the vested benefits are transferred to a different Retirement Fund. If, however, these members access benefits before retirement, or benefits are deducted from their retirement funds before retirement, their vested benefits will be reduced as part of this.
How do these rules apply pre- and post-retirement stage?
It is imperative to access retirement benefits counselling or get financial advice when making big financial decisions. Speak to our Independent Retirement specialists to find out about the exceptions and how your employees could be affected.
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