AS it was confirmed this week in the 2016 Budget Speech that specific rules of the Tax Law Amendment Act have been postponed, while other rules will still come into effect as of 1 March 2016.
Hugh Hacking, Head of Old Mutual Corporate Consultants, says that this announcement provides the retirement industry with clarity on a way forward after recent indications of a possible delay.
The Revenue Laws Amendment Bill 2016, introduced in the 2016 Budget Speech, gives effect to the decision by Cabinet last week to postpone the annuitisation requirement for provident fund members by a further two years, which will allow for further consultation with THE finance minister s announcement that the fuel levy will be raised by 30c per litre to R2.85 per litre for petrol and R2.70 per litre for diesel, effective from April 6, will impact motorists and the economy.
That s because most goods in South Africa are moved by road.
Neil Roets, the CEO of one of the largest debt management companies in South Africa, Debt Rescue, said budget increases were equitable, but the immediate future for consumers looked dismal.
He said consumers with heavy debt were going to feel the increase in the fuel price the worst. key stakeholders.
Hacking explains: The annuitisation requirement would have required certain provident fund members, depending on their retirement savings amount among other aspects, to purchase a pension (annuity) to provide them with a monthly income.”
The retirement reforms related to tax harmonisation of retirement funds is set to become a reality on 1 March 2016. Members of all approved funds (Pension, Provident and Retirement Annuity Funds) will now be afforded a contribution deduction of 27.5% of the greater taxable income or remuneration, subject to a yearly maximum of R350 000.
The effects of this will
Ratings agencies, including Fitch Ratings and Standard and Poor s, warned South Africa s bonds would be reduced to junk status if the economy was not better managed.
Should this happen, it would lead to an interest rate increase, which would impact on deeply indebted consumers.
I m not reassured by the minister s budget speech that the economy will grow enough to prevent a downgrade.
According to the latest statistics released by the National Credit Regulator, less than 50% of all creditactive consumers are overindebted and in arrears by affect members differently. For some members, it will mean an increased take home pay, while for others, there won t be much of a difference.
This will very much depend on a member s personal situation. We urge all members to seek professional financial advice on how to maximise their retirement savings in light of these amendments,” says Hacking.
The annuitisation amount will also be increased from R75 000 to R247 500 for pension fund members.
This will mean that pension fund members will now be able to take home a larger lump sum before buying an annuity.” three months or more.
Roets said it was important to draft a budget (taking into account your income, deductions, expenses and monthly debt repayments) and stick to it.
As soon as you find yourself in a situation where your debt is overwhelming, seek help as soon as possible by contacting a debt counsellor, said Roets.
Your debt counsellor renegotiates your debt repayments, ensuring you are protected from new legal action.
Credit providers have accepted that this is one of the best and most cost effective collection methods.”