The chairman of Parliament’s Standing Committee on Finance has called on stakeholders to put their heads together to propose some kind of conditional deferment of the requirement that provident fund members buy a pension or annuity at retirement.
Yunus Carrim made the call this week after the Congress of South African Trade Unions (Cosatu) told a joint meeting of the committee and the Select Committee on Finance that it was opposed to annuitisation being delayed for two years as proposed by the cabinet and put before Parliament in the Revenue Laws Amendment Bill.
Cosatu general secretary Bheki Ntshalintshali told the committee that it was opposed to postponing annuitisation, because it feared the two-year delay gave it no guarantee that there would be proper engagement on issues such as how much provident fund members should be allowed to take as a lump sum at retirement versus how much they should be obliged to use to buy a pension.
He also said the union felt it had been let down after the previous postponement, because there had been no movement on the social security reform discussion document. However, he acknowledged that cabinet had committed to releasing the document this year.
Ismail Momoniat, the deputy director-general of tax and financial sector policy at the National Treasury, said Treasury feared that, if after two years there was no agreement on annuitisation, the intention to remove the tax deductions on contributions provident fund members receive from this month could be as contentious as annuitisation is currently.
Carrim said the committee would like to deal with the bill on Tuesday so that it could be put before Parliament on Wednesday next week.
CORRECTION
The article headed “New deduction regime for provident and pension funds”, published on Saturday February 26, stated that the threshold below which members of all retirement funds do not have to buy an annuity at retirement was increased to R247 500 late last year. The article should have stated that the bill changing the amount was passed late last year, but the new threshold took effect from March 1 this year. The new threshold is not likely to apply to members of provident funds, because the government has announced that it will delay for two years the requirement for members of these funds to buy a pension when they retire.