Building industry urges employers to inform staff of tax status quo

THE BUILDING Industry Bargaining Council has urged employers to inform employees of the status quo regarding their tax and retirement obligations, following the recent announcements made in Minister Pravin Gordhan’s Budget speech.

In recent months, there has been a lot of confusion regarding amendments which would have enabled members of retirement funds to access only a third of their funds as a lump sum cash payment on retirement. The balance would have to be used to buy a pension to secure an ongoing income.

The belief – based on misinformation and misconceptions about the impact of the amendments – that people would not be able to access their savings, had resulted in some employees considering resigning.

However, since the govern- ment has now postponed the annuitisation of provident fund retirement fund credits for two years, to allow more engagement with all stakeholders, there will be no marked change to the existing rules.

It should be noted that amendments to the tax treatment of contributions was not postponed and the increase of the maximum cash that may be taken as a lump sum at retirement went ahead on March 1.

“We urge employers to ensure their employees fully understand the implications of this postponement, as well as other rules and regulations that affect them, to ensure that no drastic decisions are made based on a misinterpretation of the tax environment,” says Ronel Sheehan, secretary for the Building Industry Bargaining Council ( Cape of Good Hope).