A. Matters affecting retirement funds

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1 Edition 73: February 2017 SA s Finance Minister Pravin Gordhan delivered the National Budget speech on 22 February This publication summarises issues which directly impact on retirement funds and provides high level budget highlights. The publication also provides a summary of certain budget items which directly affect individuals. A. Matters affecting retirement funds There have been no changes to the lump sum tax tables for retirement and withdrawal benefits Contribution deduction limits of 27.5% of remuneration or taxable income, capped at R remains unchanged Retiring members will be able to preserve their benefits by transferring their retirement benefits to retirement annuity funds, after reaching normal retirement age Existing employees will no longer be limited to a 12 month period to join the employer s fund Benefits from public sector funds that accrued before 1 March 1998 will remain tax free every time a member transfers to another approved fund National Treasury and the Financial Services Board are engaging on how to solve the challenge of unclaimed benefits. B. Retirement fund reform The final version of the default Regulations to the Pension Funds Act is set to be published later this year Amendments to the Pension Funds Act are to be considered in 2017, to introduce the concept of umbrella funds and to clarify the Registrar s powers regarding funds that do not have properly constituted boards of trustees The implementation of provident fund annuitisation has (still) been postponed to 1 March There are ongoing discussions at NEDLAC on this issue. If no agreement is reached on this, Government is still stating that they will review tax deductions for provident funds National Treasury will engage with industry to provide annuity products for low and middle income members of funds Government is considering measures for employers to automatically enrol their employees into retirement funds.

2 C. Financial Sector regulation The Financial Sector Regulation Bill will become law in This will result in the formation of the Financial Sector Conduct Authority (the new market conduct regulator) and the Ombud Council. The Financial Sector Conduct Authority will continue to implement the Treating Customers Fairly framework The draft Conduct of Financial Institutions Bill and a financial literacy policy will be released this year Revised Policyholder Protection Rules have been issued for comment and deal with how insurers must manage customer complaints The abuse of emolument attachment orders (garnishee orders) will be reduced by new requirements for the issuing, structuring and reporting of these orders by the courts Government is exploring debt relief for over-indebted households through voluntary mediation. Proposals are to be announced in the first half of 2017 The Insurance Bill of 2016 will facilitate the provision and distribution of good value, low-cost insurance products to meet the needs of low income consumers. D. Health reform A National Health Insurance Fund is to be established during, with services to be delivered through public and private medical practitioners. The initial focus will be: To improve access to maternal health, ante-natal services and family planning services To expand school health programmes, including provision of spectacles and hearing aids To improve services for people with disabilities, the elderly and mentally ill patients, including provision of wheelchairs and other assistive devices. Funding option include possible downward adjustments to tax credits on medical scheme contributions. Further details are to be provided in the Adjustments Budget in October

3 E. Highlights: matters affecting individuals F. Tax-free savings accounts The annual contribution to a tax free savings account is increased from R to R There is no adjustment to the lifetime allowance of R G. Matters affecting retirement funds Grants and social security limits (increases effective from 1 April 2017) (Per Month) (Per Month) State old age grant State old age grant for people over 75 Disability grant Child support grant Foster care grant Care dependency grant War veterans grant R1 525 R350 R890 R1 435 R1 620 R380 R920 R

4 Tax rebate Primary Rebate Secondary Rebate (for taxpayers 65 and older) Tertiary Rebate (for taxpayers 75 and older) R R7 407 R2 466 R R7 479 R2 493 Taxable threshold (below which tax is not payable) Taxpayers under 65 Taxpayers between 65 and 74 Taxpayers 75 and older R R R R R R Monthly medical tax credits Member First beneficiary Additional beneficiaries R286 R286 R192 R303 R303 R204 4

5 Personal tax tables (natural persons) ) ) Taxable income Tax rates Taxable income Tax rates 0 R % of each R1 0 -R % of taxable income R R R % of the amount above R R R R % of R R R R % of the amount above R R R R % of R R R R % of the amount above R R R R % of R R R R % of the amount above R R R R % of R R and above R % of the amount above R R R R % of R N/A N/A R and above R % of R