In the 2013 budget the Minister of Finance made a number of proposals that are relevant for the employee benefits industry. [toggle_simple title=”Retirement reform proposals for further discussion” width=”Width of toggle box”] National Treasury makes the point that employers which take greater responsibility for the overall financial well-being of their workers, including through the design of their retirement funds, reap the rewards of a more stable and happier work force. The policy proposals introduce defaults in retirement fund or benefit structure design in order to nudge, rather than force, individuals into making decisions which serve their long-term interests. [/toggle_simple] [toggle_simple title=”Taxation of retirement funds” width=”Width of toggle box”] From T-day (2015), employer contributions to retirement funds will become a fringe benefit in the hands of employees for tax purposes. Individuals will be able to receive an annual tax deduction on employer and employee contributions to a pension fund, provident fund or retirement annuity fund up to 27.5% of the greater of remuneration and taxable income (excluding retirement annuity or lump sum income). A ceiling of R350 000 will apply. Observation: The threshold has been increased from R300 000 and the age distinction in respect of those under 45 years (22.5% and R250 000), referred to in the 2012 budget, has been discarded. It is still unclear how this will affect defined benefit pension plans. [/toggle_simple] [toggle_simple title=”Fund Governance” width=”Width of toggle box”] The duties of trustees to act independently and free from conflicts of interest will be strengthened by elevating PF Circular 130, which deals with the governance of retirement funds, to a Directive. A draft will be published for consultation later this year. The FSB will monitor trustee appointments and will help ensure that trustees meet
