Government today announced that the compulsory annuitisation of provident fund benefits, which was due to take effect on March 1, will be postponed by two more years until 1 March 2018.
The provision requiring the compulsory annuitisation of two-thirds of provident fund savings on retirement would have replaced the current allowance, which allows workers to take the full amount as a cash lump sum.
An amendment to the Taxation Laws Amendment Act will be tabled in Parliament next week to effect the Cabinet decision to postpone until March 2018.
The bill will propose the following to Parliament:
- To postpone the annuitisation requirement for provident funds for two years, until 1 March 2018.
- Provident fund members will not be required to annuitise contributions to their funds that were made before 1 March 2018.
- The ability to transfer tax-free from pension fund to provident fund will also be delayed until 1 March 2018.
The postponement is only applicable to compulsory annuitisation. All tax-related measures, including the 27.5% tax deductions on contributions to any retirement fund, will still be implemented on March 1 this year. Deductible contributions will be capped at R350 000.