NIGEL/HEIDELBERG – Earlier this month, the 2015 Taxation Laws Amendment Bill was signed into law and now confirms that the tax changes will take place on March 1, but there seems to exist some confusion and misunderstanding around the changes to retirement funds.

Steven Nathan, chief executive officer of 10X Investments explained how the retirement changes will affect you.

“The new rules are designed to harmonise the tax treatment and annuitisation requirements for all types of retirement funds such as pension, provident and retirement annuity funds,” Nathan said.

The changes relate to two issues – the tax free deductibility of retirement fund contributions and the lump sum at retirement from provident funds.

* Pension fund members.

Pension fund members are least affected by these changes as the current pension fund model is effectively becoming the “standard” retirement fund model. One notably change is that the minimum fund balance requiring annuitisation will increase from R75 000 to R247 500, and that from March 1, they will also be able to transfer the pension fund proceeds tax-free to a provident or provident preservation fund.

* Provident fund members.

Provident fund members are most affected by these changes as they will effectively switch to the pension fund model (requiring the purchase of a compulsory annuity at retirement with two-thirds of their fund balance). However, their so-called “vested rights” will remain under the old rules.

What do our readers say? What will happen to your money when you die?

Send us your views at newsnigel.heraut@lantic.net