The President has approved the Taxation Laws Amendment Bill, 2015 which was passed by both Houses of Parliament at the end of last year.

The wait is over for retirement fund members, who will enjoy increased tax deductions from their contributions to retirement funds. This includes provident funds, for which members were not previously able to claim a deduction. The tax deduction of up to 27.5% of the greater of taxable income or employment income, subject to an annual ceiling of R350 000, will come into effect.

Another change is that employer contributions to occupational pension and provident funds will be included in the gross income of employees as a fringe benefit. This means that employees will be able to treat these contributions as their own when calculating their tax deductions. These deductions are subject to the limits mentioned above.

You will have to buy an income-providing product

Retirement funds will also be aligned, ironing out some of the differences between the different products. One of the key changes is around annuitisation the process of converting retirement savings into a stream of futureincome. From 1 March, provident fund members, like retirement annuity and pension fund members, will only be allowed to take one-third of their retirement savings as cash and they will have to use the rest of their nest egg to buy a product that pays them an income during retirement.

Treasury has stressed that vested rights will be protected i.e. the new rules will not apply to historic savings or to growth on those contributions.

unless you are about to turn 55

If a provident fund member is 55 or older on 1 March, the new requirement will not apply. Any accumulated retirement savings as at 1 March, as well as new contributions and growth after 1 March, can still be taken as a cash lump sum at retirement.

or you have saved under R247 500

Members with a retirement benefit at retirement less than or equal to R247 500 will be allowed to withdraw the entire amount without the need to purchase an annuity, as of March. This is an increase on the current value of R75 000.