The bright side of retirement reforms

Retirement options are set to change from the 1st of March 2016 when new legislation comes into play. The new legislation aims to standardise the various types of retirement funds which are available to us, namely provident funds, pension funds and retirement annuities. The changes will make things a lot easier to understand and apply in the future as the current variations are complex.

The main changes point to provident funds which were not restricted as the full lump sum could be taken at retirement. Retirement annuities were always treated like pension funds in that at retirement you could only take a third in cash and the remaining two thirds had to be invested in a pension. Provident funds effectively become pension funds from the 1st of March.The new regulations bring all options into line, levelling the playing fields at retirement.

The advantages

Currently there are varying deductions applied to provident, pension and retirement annuity funds. The good news is that the overall deductibility of contributions to retirement funding increases to 27.5% to a maximum amount of R350 000 per annum. Any amounts over this capping can be rolled over into the next tax year and deducted.

Deductions are only allowed in the hands of the employee so you will need to clarify things with your employer to ensure that the correct tax is applied. Any contributions made by your employer will need to be neutralised by a fringe benefit tax on your payslip.

These changes are an ideal opportunity for you to sit down with your financial planner and revisit your retirement planning. There are benefits to be found in optimising your contributions towards your future funding taking full advantage of the new level of tax deductibility.

Listen to the audio below for more information

Read more from Paul Roelofse at www.investforlife.co.za

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Male circumcision lowers the risk of HIV for women by 30%

Male circumcision lowers the risk of HIV for women by 30%

This is according to research presented at the recent International AIDS Society Conference on HIV Science IAS 2017 in Paris.

ANC's reaction post motion of no confidence "absolutely shocking" - Verwoerd

ANC's reaction post motion of no confidence "absolutely shocking" - Verwoerd

Former ANC MP Melanie Verwoerd shares her views on the failed motion of no confidence and what she thinks will be the next move.

Health organisations to set up task force against fake medicine in SA

Health organisations to set up task force against fake medicine in SA

The Counterfeits in Medicines Indaba was held in Johannesburg on Friday.

SA  lags behind international breastfeeding standard

SA lags behind international breastfeeding standard

Africa Melane speaks to Jenny Wright, CEO of Human Milk Bank.

Report shows that 75% of mental illness sufferers don't get the appropriate help

Report shows that 75% of mental illness sufferers don't get the appropriate help

The report is from the Department of Psychiatry at UCT and was conducted between from 2004-2014.

Plans to ban diesel cars in the UK is a knee jerk reaction- FairFuelUK

Plans to ban diesel cars in the UK is a knee jerk reaction- FairFuelUK

FairFuelUK is the award winning Public Affairs Campaign that fights for lower fuel duty.

Popular articles
It's not the end of the road... Top tips to improve your matric

It's not the end of the road... Top tips to improve your matric

"Recognise that it’s not the end, it’s the beginning." Expert advise for school-leavers who want to improve their results.

Pamela Nomvete on her downfalls as actress, and 'climbing back'

Pamela Nomvete on her downfalls as actress, and 'climbing back'

This week Xolani Gwala's speaks to former Generations actor Pamela Nomvete for #WhatInTheWorldHappenedTo feature.

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

Meet the founder of Capitec Bank, named ‘Best Bank on Earth and Cheapest in SA’

Meet the founder of Capitec Bank, named ‘Best Bank on Earth and Cheapest in SA’

Michiel le Roux speaks about the fascinating story behind the little bank that has the Big 4 shaking in their boots.

Best way to get richer (especially if you’re between ages 20 and 45)

Best way to get richer (especially if you’re between ages 20 and 45)

Still young(ish)? Consider the single best thing you can do to increase your wealth by much more than the inflation rate.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

Blesserfinder: Matching you with a sugar daddy near you

Blesserfinder: Matching you with a sugar daddy near you

Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?

5 ways the NSFAS funding model will change in 2017

5 ways the NSFAS funding model will change in 2017

The National Student Financial Aid Scheme (NSFAS) will pilot a new funding model in 2017. NSFAS chairperson Sizwe Nxasana explains.