Pravin Gordhan, our Finance Minister has announced government has delayed the implementation of the new proposed tax laws that were initially meant to come into force on March 1, 2016. It seems it may be postponed to 2018 rather.

Currently retirees of a provident fund are entitled to a full amount and the proposed changes would regulate that up to only 1/3rd is accessed and the remainder be used to purchase compulsory annuities/income.

The proposed changes would equate to the Act that governs pension funds and retirement annuities. The general purpose of the Act is to ensure that the government will allow a tax relief on contributions and in return legislation governs that a minimum of 2/3rd of the matured fund be used to purchase an income to prevent splurging and irresponsible exhaustion of funds.

This seems sensible, as if one’s retirement savings is depleted, one turns to the government income, which is insufficient for the recipient (assuming they qualify) and costly in terms of government expenditure.

The Congress of South African Trade Union (COSATU) however, strongly opposes the propped changes on the basis of rejection of the so-called ‘dictatorship!’

Sadly only five percent of the South African population save sufficiently to retire comfortably. Hence, some sort of win-win precedence needs to be agreed upon and implemented between government and COSATU to ensure the best interest of South African retirees.

This critical situation should be a significant eye-opener to the South African population to urgently address their planning and savings for retirement requirements.