New provident fund regulations take effect 1 March

The Taxation Laws Amendment Act is now in effect in South Africa. RisCura’s Fran Troskie talks about two key takeaway points for trustees and provident fund members – communication and education  — on the new laws and how they are applied. Here are some of her tips;

• Traditional differences between pension and provident funds are being removed in a bid by National Treasury to harmonise the retirement fund system.
• The new laws aim to encourage a culture of saving so retirement fund members can retire comfortably
• The new laws allow retirement fund members to invest up to 27.5% of taxable income.
• Members are required by law to use two-thirds of their provident fund to purchase a retirement product.
• These changes are not being applied retrospectively.
• Trustees and employee benefits administrators need to have transparent, efficient and effective processes in place to value members’ assets and ringfence portions that are to be paid out as lumpsums and portions that have to be set aside for a retirement product.