CityPress - - Business -

The govern­ment has de­layed the im­ple­men­ta­tion of a new tax law that would force South Africans to put two-thirds of their prov­i­dent fund sav­ings in a re­tire­ment an­nu­ity. The pro­vi­sion meant that re­tirees would be al­lowed to take only one-third in cash. They are cur­rently en­ti­tled to the full amount.

Ac­cord­ing to a state­ment by the fi­nance min­istry on Thurs­day, the govern­ment has pro­posed that the an­nuiti­sa­tion re­quire­ment for prov­i­dent fund mem­bers be post­poned for two years, to 1 March 2018.

“Govern­ment re­mains of the view that the prin­ci­ple of an­nuiti­sa­tion is in the best in­ter­est of all mem­bers of re­tire­ment funds as it can al­le­vi­ate old-age poverty,” the state­ment said.

The Congress of South African Trade Unions was op­posed to the act, which Pres­i­dent Ja­cob Zuma signed into law last year. It be­lieves the law gives the govern­ment the right “to dic­tate to work­ers how and when they should ac­cess and spend their de­ferred salaries in the form of pen­sions.”

In the run-up to T-Day, as the new leg­is­la­tion was called, Der­ick Fer­reira, se­nior prod­uct man­ager at Old Mu­tual, said he ex­pected the tax law changes to lead to an “up­surge of in­ter­est in all sav­ings ve­hi­cles this year” as in­vestors and re­tirees con­sider op­tions that of­fer them max­i­mum tax con­ces­sions.

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