Nene gives his support for retirement reforms that will ‘protect’ pensioners
27 November 2015
Posted by: Author: Linda Ensor
Author: Linda Ensor (BDlive)
The retirement reforms so strongly opposed by the Congress of South African Trade Unions (Cosatu) were good ones that would help protect pensioners against old-age poverty, Finance Minister Nhlanhla Nene emphasised on Thursday.
The minister dismissed the misinformation that the introduction of enforced annuitisation of two-thirds of provident funds on retirement meant that the government intended to nationalise workers’ savings.
Fears about this and the need of indebted workers to get their hands on their savings have prompted thousands to resign from their jobs.
The minister’s remarks were made in finalising the National Assembly debate on the Taxation Laws Amendment Bill, which was adopted by all parties except the Economic Freedom Fighters, which said it failed to address the tax evasion by large multinationals. The bill will now be processed by the National Council of Provinces.
MPs emphasised the importance of the Treasury conducting an intense communication campaign to convey the benefits of the measure for provident fund members who will for the first time be able to get tax deductions on their retirement fund contributions from March 1 2016 when the reform takes effect. This will increase their take-home pay.
Mr Nene said workers’ opposition had been taken into account as the threshold of accumulated savings at which the annuitisation requirement will take effect was increased from R150,000 to R247,500. This means they will not be affected by compulsory annuitisation.
Mr Nene said the Treasury would undertake a review of the new law, including further consultations, within two years of its implementation. It would also conduct an extensive education campaign.
The minister also said the capping of tax deductions at 27.5% of taxable income, or R350,000, whichever is the lesser, would curb the abuse of provident funds by high-income earners to avoid paying tax.
Standing committee on finance chairman Yunus Carrim said every effort had been made to get Cosatu’s consensus on the bill.
This article first appeared on bdlive.co.za.