On 16 October 2014 the Department of National Treasury announced a delay in the implementation of the changes intended to standardise the tax treatment of retirement fund contributions and force the annuitisation of the benefits of provident fund members on retirement.  Further engagements with trade unions on these proposed changes were carried out, and then, on 22 July 2015 the draft Taxation Laws Amendment Bill, 2015 was published (effective date of 1 March 2016).  It includes the implementation of the consistent tax treatment of all retirement funds.   National Treasury have invited comments on the draft Bill to be submitted by 24 August 2015.  They have also indicated that, together with SARS, they will engage separately with key stakeholders before finalising the revised Bill which will then be tabled formally in Parliament for its consideration. 

If implemented, the proposed standardisation of the tax treatment of all retirement funds would mean thatcontributions to pension, provident and retirement annuity funds would all be treated the samefrom 1 March 2016.   Employer contributions to all of these funds would be taxed in the hands of the member and the member would then get a tax deduction on the total contributions towards these retirement funds, up to a maximum of R350 000 per year or 27,5% of the higher of the member's remuneration and taxable income. 

The other aspect of the proposed change extends the requirement to purchase an annuity on retirement to all members of provident funds and provident preservation funds who are under the age of 55 on 1 March 2016.   They will be required to purchase an annuity with two thirds of the value of their retirement savings from contributions that were made after 1 March 2016 (subject to a minimum threshold below which members would not be required to purchase an annuity at retirement).  The value of this threshold is still the subject of consultations through the National Economic Development and Labour Council (NEDLAC).  Provident fund members who are aged 55 or older on 1 March 2016 would not be required to purchase an annuity upon retirement and will still be able to access their full retirement savings as a lump sum on retirement. 

National Treasury has previously been at great pains to assure members that no vested rights will be impacted upon by the proposed changes and this remains their position.  Accordingly, it is hoped that members of funds will receive wise counsel from their representatives to guard against the unfortunate mass resignations and withdrawals that were experienced last year.