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SOUTH AFRICAN PENSIONS
PROVISION OF RETIREMENT BENEFITS TODAY
STATE BENEFITS
There is little traditionally supplied by the State
,
though the Government have
promised change and in
the February 2002 Budget ,
State pensions (
for these eligible) were
increased around 14% from 500R pm to 580R. (£35.00 )
Means testing ensures only the poorest registered persons get a
pension.
PRIVATE PROVISION
Pension Funds v
Provident Funds :
Provident Funds are more common
and contributions are not tax deductible but the entire benefit may be commuted for a
cash lump sum.
DB Occupational Funds
:
Traditional for major Corporations and provide very similar
benefits to a comparable UK
fund. See Pension Funds Act 1956.
New Legislation, 2000 Act, operational late 2001.
1. Complete Change and need to examine all transfers out since
1980.
2. Independent Actuary to certify correct or incorrect payments.
3. Trustees to supervise investigations and be liable if default.
Few have protection.
4. Early Retirement and redundancy
(
retrenchment) to be examined
for short payments. 5.
Special Enhancements to be scrutinised.
6. Investments to be scrutinised to ensure compliance.
Shock and horror for Employers and Trustees
as
the 1980 roll-back generally
unworkable.
Many Employers decide that DB has a limited future but cannot
close or wind-up Funds until the investigations are complete and
compliance certified. Luckily most
Funds are in surplus and the Government acted very fast
(
retrospective from initial announcement )
to prevent assets disappearing.
Currently enforcement of the legislation is proving difficult.
Graham Chrystie, Thomas Eggar, 6/02.
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