Budget Speech, 2013Financial services and retirement reform |
Mister Speaker,
In last year’s Budget, I indicated the need for South African households to save more. I am now able to announce the following proposals, for consultation before we introduce the necessary legislation later this year:
| • | Tax-preferred savings and investment accounts will be introduced in 2015. |
| • | Retirement funds will be required to identify appropriate preservation funds for exiting members, who will be encouraged to preserve when changing jobs. |
| • | Retirement funds will be required to guide their members through the process of converting savings into a regular income after retirement, and to choose or establish default annuity products that meet appropriate principles and standards. More competition will be promoted by allowing providers other than life offices to sell living annuities. |
| • | The tax treatment of pension, provident and retirement annuity funds will be simplified and harmonized. |
| • | Governance reforms of retirement funds will also be implemented, with measures in place to ensure trustees of retirement funds are trained once they have been appointed. I intend to call up a conference of all trustees this year to take this process forward. |
We are also considering how to encourage all employers to provide appropriate retirement mechanisms for their employees, as part of the broader social security reforms. In implementing these reforms, the vested rights of current members of retirement funds will be protected.
Let me take this opportunity, Mister Speaker, to confirm that the Government Employees Pension Fund has remained fully funded despite the turmoil in financial markets in recent years. A 6 per cent increase in civil service pensions will be effected in April this year.