A retirement fund, is by virtue of its name, mainly seen as a fund in which to accumulate contributions for retirement. Every day retirement fund members pass away enabling the retirement fund to fulfil its alternative role of providing financial support to the deceased member’s loved ones. This article addresses the vital question “How will your death benefits be distributed when you die? A significant portion of complaints lodged with the Pension Funds Adjudicator involves beneficiaries or family members of deceased retirement fund members complaining about the Trustees’ discretion in allocating death benefits.
From 1 March 2014 it is a criminal offence for employers to deduct and not pay over their staff’s retirement contributions. The contributions must be paid into the bank account of the fund by no later than 7 days after the end of the month, for which the contributions are payable.
National treasury announced on 3 December 2015 that the long awaited Taxation Laws Amendment Act will be implemented on 1 March 2016.
From 1 March 2016 contributions to Pension, Provident and Retirement Annuity Funds) will be deductible to the lesser of:
Employer contributions to a pension, provident and retirement annuity fund will become a fringe benefit for the employee. In other words it will be taxed in the employee’s hands. These contributions, together with the employee’s contributions to retirement funds, will qualify for the maximum deductions.
National Treasury announced that the Taxation Laws Amendment Act, 2015 will be implemented on 1 March 2016
However the long awaited changes to Provident Funds have been postponed to March 2018.From then a Provident Fund will start to look very much like a Pension Fund. At retirement no more than one third of the Fund value fund may be taken in cash and the remainder must be paid in the form of an annuity/pension.