|
DO
EMPLOYEES HAVE A SAY IN THE DESIGN OF THE BENEFIT
STRUCTURE OF A FUND?
It
would be beneficial for all employers to talk to their
staff to negotiate the most suitable benefit structure. In
terms of the Labour Relations Act, employees have a right
to be consulted by the employer when any change is to be
made which will affect the status of their work. This
implies that the employer will have to consult the
employees prior to designing the benefit structure of the
fund.
Any
change in the fund structure which involves a reduction in
benefits or additional costs to the members will have to
be approved in writing by at least 75% of the members
before the changes can be submitted to the FSB for
approval.
back
to top
WHAT
HAPPENS
WHEN THERE IS A REDUCTION, SUSPENSION OR MID-YEAR INCREASE
IN SALARY?
A
reduction in salary is possible in the case of, for
example, commission earners, temporary staff or when
someone is demoted. In a defined contribution fund, the
employee is automatically going to pay lower
contributions, unless an election is made to pay
contributions based on the pre-reduction salary and
provided the rules allow for this to be done. Any excess
of contributions over the limits imposed by the Income Tax
Act will, however, not be allowed as deductions.
Suspension
of salary, for example in the case of extended study
leave, is usually not a problem. A life insurer will
normally allow up to 24 months suspension of
contributions. If the employer agrees, it is possible to
continue contributions, particularly those required for
life insurance cover. Retirement benefits will not be
earned if contributions are unpaid during the period of
absence.
Mid-year
increases are increases in salary at a date other than at
the renewal date. Computerised
administration
systems mean that this is generally not a problem, as
these permit benefit and contribution adjustments on a
monthly basis.
back
to top
MAY
PENSION BENEFITS BE REDUCED OR USED AS SECURITY?
Section
37 A of the Pension Funds Act stipulates that a member's
benefits payable in terms of the rules of a fund
(including an annuity purchased by the fund from an
insurer for a member) may not be reduced, transferred,
ceded, pledged, hypothecated, subjected to any from of
execution under a judgment or order of a court of law or
taken into account in the determination of a judgment
debtor's financial position in terms of section 65 of the
Magistrates' Court Act for an amount exceeding R3 000.
Should
a member or beneficiary attempt to reduce his or her
benefits or right to such benefits, the fund may withhold
or suspend payment thereof.
However,
section 37A allows the following exceptions where pension
benefits may be reduced:
-
The
payment of income tax in respect of lump sum payments
from retirement funds and in respect of arrear taxes;
-
Deductions
permitted in terms of section 37D of the Pension Funds
Act, e.g. housing loans and damages caused to an
employer by a member's theft, fraud, dishonesty or
misconduct;
-
Maintenance
payments in terms of the Maintenance Act;
-
A
maximum amount of R3 000 can be taken into account in
terms of section 65 of the Magistrates' Court Act.
back
to top
WHAT
ARE THE NEW PROVISIONS RELATING TO HOUSING LOANS?
The
Pension Funds Amendment Act, which became operative on 7
December 2001, brought about significant changes to the
housing loan provisions in the Pension Funds Act. Amongst
other things, it seeks to clarify the position regarding
the power of registered retirement funds to provide
guarantees in respect of housing loans granted to members
by persons other than the fund. It also widens the concept
of home ownership, regulates the amount of loans and
guarantees and provides for the deduction of housing loans
from members' benefits in cases of default and transfers
to another retirement fund. These changes can briefly be
summarised as follows:
-
In
addition to lending money directly to a member
(previously only applicable to privately administered
funds), a fund can also provide a guarantee to a
lending institution such as a bank or building society
as security for the institution to grant a housing
loan to a member, against a pledge of the member's
withdrawal benefit payable by the fund. This means
that both insured and privately administered funds can
now provide guarantees for housing loans. The property
may belong to the spouse of the member or to them
jointly.
-
Currently,
housing loans are restricted to members that own
property registered in the Deeds Office. To enable
more members to qualify for housing loans, the Act
extends loans to property for which the member and/or
spouse obtained a right of ownership through a right
of occupation, other than as a result of a lease
agreement, which could for instance cover homes on
tribal land or informal dwellings.
-
The
Act provides that if the repayment period of the
housing loan (maximum 30 years) extends beyond a
member's normal retirement date, the outstanding
balance on that date must be capable of being repaid
out of no more than one-third of the total value of
the retirement benefit. In other words, in that
instance the lending institution/fund may not deduct
more than one-third of the member's total retirement
benefit and would presumably have to employ other
means outside of the
fund to obtain the balance from the member.
-
Furthermore,
the Act also makes provision for the deduction of the
outstanding loan amount from the benefit to which the
member is entitled in terms of the rules of the fund
(i.e. the withdrawal benefit) on default of the loan
by the member whilst still in service of the employer
and a member of the fund, or on transfer of the member
to another fund. However, such deduction may only be
made as a last resort if no other arrangement can be
made. In terms of SARS' draft General Note 30, the
amount deducted will be taxed as a withdrawal benefit
in terms of the Second Schedule to the Income Tax Act.
-
The
prohibition of the granting of a loan by a fund for
any purpose other than a housing loan is now also
extended to disallow furnishing of guarantees by a
fund for any purpose other than a housing loan. The
legitimate purposes for which a housing loan may be
granted are:
-
to acquire immovable property on which a residence
has been or will be erected; or
-
to acquire immovable property, or to erect a
residence on immovable property; or
-
to make additions or alterations to or to maintain
or repair a residence.
With
regard to the residence, the Act states that either the
member or his or her spouse or both of them must have
obtained ownership or the right to ownership through a
right of occupation in the residence, and it must be
occupied by the member or his/her dependant.
back
to top
WHAT
IS THE ORDER OF CLAIMS AGAINST THE RETIREMENT FUND?
The
order of preference, which enjoys the support of the
retirement fund industry, is as follows:
-
Tax on lump sum benefits in terms of the Second Schedule
to the Income Tax Act.
-
Housing loans or benefits payable to a non-member spouse
in terms of a divorce order - in chronological
order.
-
Arrear taxes.
-
Damages claims by employers against employees in terms of
section 37D of the Pension Funds Act.
-
Maintenance orders in terms of the Maintenance Act.
-
Judgment debt orders in terms of section 65 of the
Magistrates' Court Act up to a maximum of R3 000.
back
to top
WHAT
MAY BE DEDUCTED FROM A MEMBER'S PENSION BENEFITS?
In
terms of section 37D of the Pension Funds Act, a fund may
deduct the following amounts from the benefits payable in
terms of the rules of the fund when they become due and
payable to the member:
-
Any amount outstanding in respect of housing loans which
were granted to members directly by the fund or the
employer;
-
Any amount for which the fund or employer is liable in
terms of a guarantee given by the fund or the employer in
respect of a housing loan;
-
Damages caused to the employer by the member as a result
of theft, fraud, dishonesty or misconduct, provided that:
-
the member has admitted liability in writing to the
misdemeanour, or
-
judgment has been obtained against the member in a court
of law;
-
With the member's consent, medical aid subscriptions and
insurance premiums;
-
Such other deductions as the Registrar of Pension Funds
may allow.
What
are the requirements in respect of deductions from a
member's pension benefits due to the member's theft,
fraud, dishonesty or misconduct?
In
terms of section 37D(b)(ii) of the Pension Funds Act, a
fund may deduct from a member's benefits payable in terms
of the rules of the fund, any amount in respect of damages
caused to the employer by the member as a result of theft,
fraud, dishonesty or misconduct, provided:
-
the member has admitted liability in writing, or
-
judgment by a court of law has been obtained against
the member
The
theft, fraud, dishonesty or misconduct should have been
committed while the employee was still a member of the
fund.
Contractual
debts such as car loans or computer loans in respect of
which the employee still owes a balance to the employer on
the date of withdrawal from the fund, do not fall within
the ambit of section 37D(b)(ii). It follows therefore that
such contractual debts may not be deducted from the
member's benefits payable in terms of the rules of the
fund, and must be liquidated through other means, e.g. by
the employer instituting civil proceedings against the
member in a court of law.
The
member's written admission of liability
The
member's written admission of liability must be clear and
unambiguous and should specifically allow for deductions
to be made in respect of a wrongdoing or delict committed
by the member against the employer.
Judgment
by a court of law
The
judgment by a court of law must relate to either of the
following:
-
A civil judgment sounding in money, i.e. a judgment made
consequent to a civil action and specifically awarding
damages to the employer as compensation for the financial
loss suffered; or
-
A compensatory order made by a criminal court in terms of
section 300 of the Criminal Procedure Act, specifically
allowing compensation to the employer for the financial
loss suffered. Presumably in his application for such an
order the employer has to claim that some wrongdoing or
delict has been committed by the employee which amounts to
theft, fraud, dishonesty or misconduct in terms of section
37D(b)(ii)
If the employer makes a housing loan to a member
and the member leaves the fund, can the
employer be compensated from the benefit payable to the
member?
Yes.
In terms of section 37D of the Pension Funds Act, a fund
may make certain deductions from benefits, which includes
any amount due by the member to the employer in respect of
a housing loan or any amount for which the employer is
liable under a guarantee granted in respect of a housing
loan by some other person to the member.
back
to top
WHO
RECEIVES THE RETIREMENT FUND BENEFIT IN CASE OF DEATH OF A
MEMBER WITH MULTIPLE SPOUSES?
In
terms of the Pension Funds Act, the spouse of the member
is always a dependant. Section 37C of the Pension Funds
Act states that in the case of more than one dependant,
the persons managing the business of the fund, i.e. the
trustees, must pay the benefit to the dependants in such
proportions as they deem equitable.
This
means that each spouse may receive a portion of the
benefit, or that one of the spouses may receive the entire
benefit, but the trustees have the discretion to decide
what proportion each spouse will actually receive. They
will exercise this discretion after an investigation into
the matter and applying their minds to the facts at
hand.
back
to top
UNDER
WHICH CIRCUMSTANCES CAN A DEATH BENEFIT BE PAID TO A TRUST?
In
terms of section 37C(2) a benefit can be paid to a trust
on behalf of a dependant or nominee. This occurs when the
deceased member has created a testamentary or an inter
vivos trust to receive these benefits on behalf of the
deceased member's dependants or nominees.
In
such a case, the member should ensure that the will
creating the testamentary trust or the trust deed of an
inter vivos trust has a special clause dealing with
benefits from the retirement fund. It should provide for:
-
the
fund benefits to be dealt with by the trustees of the
trust in the manner directed by the board,
-
the
fund benefit must be ring-fenced, and
-
the
trust deed must vest capital and income in the
particular beneficiary.
Payments
of death benefits to trusts are also permitted when the
fund pays benefits on behalf of minor dependants or
nominees who do not have a legal guardian.
back
to top
IS
A BENEFICIARY NOMINATION BINDING ON THE FUND UPON THE
DEATH OF A MEMBER?
No,
the trustees have to determine how to apportion the death
benefit between the member's various dependants and
nominated beneficiaries in accordance with the provisions
of section 37C.
back
to top
IS
WHAT IS THE POINT OF COMPLETING A BENEFICIARY NOMINATION
FORM IF THE TRUSTEES HAVE A DISCRETION AS TO HOW THEY WILL
PAY OUT A DECEASED MEMBER'S APPROVED BENEFITS?
By
completing the beneficiary nomination form, a member
indicates to the trustees the persons he would prefer to
receive his death benefits. It also indicates what
portions of the benefit the member would ideally like the
trustees to pay to the dependants and nominees.
Ideally,
the beneficiary nomination form should be updated annually
and if it is kept up to date, it makes the trustees' task
of identifying dependants and nominees and paying the
death benefits, a lot easier. It also improves the chances
of the trustees paying out according to the member's
wishes.
back
to top
WILL
TRUSTEES FAIL TO FULFIL THEIR DUTIES IF THE NOMINATED
BENEFICIARY DOES NOT RECEIVE A BENEFIT UPON THE DEATH OF A
MEMBER?
No,
if there are dependants, the nominated beneficiaries might
not get a share of the benefit at all. The task of
deciding how to apportion the benefit is not a simple one,
yet it is a task which the trustees cannot avoid or
delegate to someone else.
The
wide discretion given to trustees in terms of Section 37C
of the Pension Funds Act in this regard, makes it very
difficult for anyone to criticise the trustees' decisions,
even if a different conclusion can be arrived at by
someone else. Trustees will only be failing to fulfil
their fiduciary duties in paying death benefits if they do
not act in good faith, do not in fact apply their minds to
the problem or fail to exercise their discretion after
taking into account all the various facts at their
disposal.
back
to top
WHEN
HAVING TO CALCULATE THE PROPORTION OF EACH DEPENDANT AND
NOMINATED BENEFICIARY'S BENEFIT, WHAT ARE THE FACTORS THAT
THE TRUSTEES WILL HAVE TO CONSIDER?
In
a number of determinations the Pension Funds Adjudicator
has indicated that in order to act equitably, the fund
should have regard to a basket of factors, including:
-
the
age of the parties
-
relationship
with the deceased
-
the
extent of dependency
-
the
wishes of the deceased as reflected in his beneficiary
nomination form and/or his will
-
the
financial affairs of the dependants and
-
the
future earnings potential and prospects of the
dependants.
back
to top
DOES
A MEMBER'S DEATH BENEFIT FROM A RETIREMENT FUND FORM PART
OF HIS ESTATE?
In
terms
of section 37C of the Pension Funds Act, the death
benefits do not form part of the member's estate for
purposes of the distribution of the benefits. The benefits
are placed under the control of the retirement fund and
the trustees have the discretion to pay the benefits to
the member's dependants in such proportions as they deem
equitable.
However,
for purposes of estate duty tax, please refer to the
section regarding the estate duty consequences for
pensions and lump sums provided by pension, provident and
retirement annuity funds.
back
to top
WHO
QUALIFIES AS A DEPENDANT FOR THE PURPOSES OF DISTRIBUTION
OF A MEMBER'S DEATH BENEFITS?
Persons
who qualify as "dependants" are defined in
section 1 of the Pension Funds Act and are the following:
-
a person in respect of whom the member is legally liable
for maintenance;
-
a person in respect of whom the member is not legally
liable for maintenance, if such a person -
-
was, in the opinion of the trustees, upon the
death of the member, in fact dependent
on the member for maintenance;
-
is the spouse of the member, including a party to a
customary union according to
Black law and custom, or to a union recognised as a
marriage under the
tenets of any Asiatic religion;
-
is the child of the member, including a posthumous
child, an adopted child and an illegitimate child;
-
A person in respect of whom the member would have become
legally liable for maintenance, had the member not died.
Dependants
in respect of whom the member is legally liable for
maintenance referred to in (a) are minor children and a
spouse who rely on the member for the necessities of life.
Grandparents,
parents and grandchildren can also qualify as dependants,
but this will be dependent on the circumstances.
It
is important to note that all children qualify as
dependants, whether they are minors or majors, and must be
taken into consideration by the trustees when allocating
the benefits. The fact that all the member's children are
taken into account does not mean that all the children
will definitely receive a portion of the benefits.
back
to top
WHAT
HAPPENS IF THE TRUSTEES
PAY THE BENEFIT TO THE WRONG PERSON, OR PAY OUT THE WRONG
AMOUNT ON THE DEATH OF A MEMBER?
The
trustees must ensure that the person to whom payment is
made is in fact entitled to receive it. To this end, proof
of identity is required and identity documents, marriage
and birth certificates may well be requested.
If
trustees negligently make payment of an incorrect amount,
or make payment to a person not entitled to receive the
benefit, the trustees may incur personal liability to make
good the loss to the fund.
back
to top
WILL
FUNDS PAY INTEREST ON THE LATE PAYMENTS OF BENEFITS?
Yes,
the funds will pay interest on the late payment of any
benefit that is due and payable to the member or the
member's beneficiary/dependants. Currently, however in the
retirement fund industry, there are different practices
relating to the payment of interest on the late payment of
benefits. In some cases interest is included as part of
the benefit payable to a beneficiary and in other cases
the interest is paid separately.
SARS issued a General
Note 32 in March 2004, where it was made clear, that if
the payment of interest was included in the lump sum
benefit that was payable, then the increase benefit on the
lump sum will be subject to tax in terms of the provisions
of the second schedule and where the interest liability
arose separately to the payment of the lump sum benefit,
the fund must issue an IT
3(b) to the beneficiary and copy of the same must
be sent through to SARS
back
to top
WHAT
EFFECT DOES DIVORCE HAVE ON A MEMBER'S ENTITLEMENT TO
BENEFITS?
Current
divorce law provides that a non-member spouse in a divorce
action may share in the "pension interest" of
the member spouse.
In
terms of pension and provident funds, the "pension
interest" is an amount equal to the withdrawal
benefit which would have become payable in terms of the
rules of the fund if the member had resigned on the date
of the divorce.
In
terms of retirement annuities, the "pension
interest" is equal to the sum of all the
contributions, plus simple interest at the prescribed rate
of interest applicable on the date of divorce.
Upon
divorce, the court determines the value of each spouse's
assets and the pension interest will be included, if the
parties included the pension interest in their divorce
settlement agreement. The pension interest is calculated
as the member's withdrawal entitlement, as if the
membership terminated on the date of divorce.
As
there is no provision for interest to accrue to the
non-member spouse's pension interest, the amount
eventually received could be regarded as minimal in the
light of subsequent inflation. The court cannot order the
retirement fund to pay interest, but can order the member
spouse to pay interest from whatever resources are
available.
The
entire position pertaining to divorce and pension
interests is under review by the Department of Justice and
the Law Commission.
back
to top
DOES
ARE THERE ANY TAX IMPLICATIONS WHEN THE NON-MEMBER SPOUSE
RECEIVES HIS/HER PORTION OF THE PENSION INTERESTS ONCE THE
BENEFITS BECOME DUE AND PAYABLE?
In
terms of the Revenue Laws Amendment Act of 1999, paragraph
2B of the Second Schedule to the Income Tax Act was
amended so that an amount which accrues to the former
spouse of a member of a retirement fund in accordance with
a divorce order, shall be deemed for tax purposes to have
accrued to the member spouse.
Therefore,
the member spouse is liable to pay the full tax bill due
on the non-member's portion, as well as his/her own
portion. It also means that the former spouse will receive
his/her full benefit as stipulated in the divorce order
without any amounts having been deducted from that
benefit. This matter should be borne in mind during the
divorce negotiations.
Paragraph
2B further provides that the member spouse may recover
from his/her former spouse, the tax payable on the former
spouse's share of his/her pension interest as a result of
the inclusion thereof in the member's income. The right of
recovery is against the former spouse and not the fund.
back
to top
WHEN
WILL THE PENSION INTEREST BECOME PAYABLE TO THE EX-SPOUSE?
The
problem for the non-member spouse is that this pension
interest only becomes payable when the pension benefits
accrue to the member spouse, i.e. upon retirement,
ill-health early retirement, death or termination of
service.
back
to top
HOW
HAVE RECENT CHANGES TO THE DIVORCE ACT IMPACTED ON THE
ADMINISTRATION OF RETIREMENT FUND BENEFITS?
Certain
procedural amendments were made to the Divorce Act 70 of
1979 by means of the judicial Matters Second Amendment Act
55 of 2003. This amendment legislation has not come into
effect at the time of writing (November 2004), despite
having been published in the Government Gazette.
Registrar's
notification to the fund
In
the first instance, the amendment legislation requires the
registrar of the Court that heard the divorce, to notify
the retirement fund concerned that an endorsement be made
in the records of that retirement fund that there is a
portion of the member's benefit or pension interest that
will be payable to the non-member spouse or the ex-spouse.
back
to top
FUND
ADMINISTRATOR'S WRITTEN PROOF OF ENDORSEMENT?
The
amendment legislation then further requires that the
retirement fund administrator furnish proof of the
endorsement, to the registrar, in writing, within one
month of receipt of the registrar's notification.
This
therefore means that the legislature is specifically
trying to ensure that it comes to the retirement fund
administrator's attention that the member spouse is
divorced and that the member spouse's benefit should be
reduced as a result of the divorce court order that was
made. The legislature is attempting to put in place a
formal notification mechanism to the retirement fund, as
opposed to leaving it up to the spouses.
back
to top
WHAT
EFFECT DOES A MAINTENANCE ORDER HAVE ON A MEMBER'S PENSION
BENEFITS?
In
terms of section 37 A of the pension Funds Act, a
member's
pension benefits may be reduced by way of maintenance
orders.
The
amendment legislation then further requires that the
retirement fund administrator furnish proof of the
endorsement, to the registrar, in writing, within one
month of receipt of the registrar's notification.
The court order must be
provided to the administrator of the member spouse's fund,
which will note the maintenance court order in its
records.
The
maintenance order will be deducted from the member's
pension benefits when the benefits accrue to the member,
i.e. upon withdrawal, retirement or death.
Such
authority to deduct maintenance payments from pension
benefits is stipulated in section 26(4) of the Maintenance
Act.
The
Judicial Matters Second Amendment Act 2003
Section
16 of the Maintenance Act provides that where a
maintenance order has been made against a person and they
fail to pay in terms of the order, a further order may
then be made directing any person who is contractually
obliged to make payments of the amount.
Section
16 was amended by the Judicial Matters Second Amendment
Act 2003, whereby the words "any administrator of a
pension fund" have been included in this section. The
intention seems to be that a court may also order a
retirement fund administrator to make payments on behalf
of a person against whom a maintenance order has been made
(who will be the fund member), in favour of the person who
applied for the court order.
back
to top
WHAT
IS A PRESERVATION FUND AND HOW DOES IT WORK?
A
preservation fund can be described as an independent
retirement fund to which a member's paid-up pension or
provident fund benefits can be transferred in certain
instances. It not only preserves the member's accrued tax
status, but also allows the member one withdrawal prior to
retirement.
To
gain entry into a preservation fund on termination of
membership of an existing fund, the legal requirement is
that, prior to the member leaving the fund, the member's
employer must apply (if not already a participating
employer) to become a participating employer of either a
preservation provident or pension fund. (This decision
will be based on whether the employer has a pension or
provident fund or both for employees).
In
terms of the rules of the preservation fund, all the
employees who are members of the existing pension or
provident fund will be eligible for membership of the
preservation fund.
The
withdrawing member must apply (also prior to termination
and often simultaneously with the employer's application)
to become a member of the preservation fund and to
transfer benefits to the preservation fund on termination
of employment. In this way, the member preserves the
retirement benefits derived from years of previous service
with no tax levied on the transfer.
back
to top
WHEN
MAY ONE TRANSFER RETIREMENT FUND BENEFITS TO A PRESERVATION
FUND?
Only
upon resignation, retrenchment or dismissal from
employment or if the employer's retirement fund is wound
up or liquidated.
back
to top
IF
ONE RESIGNS FROM EMPLOYMENT AND YOU WANT TO PRESERVE YOUR
RETIREMENT FUND BENEFIT, ARE YOU ALLOWED TO SPLIT THE
BENEFIT BETWEEN DIFFERENT INSURER'S PRESERVATION FUNDS?
No,
the benefit may only be transferred to a single
preservation fund.
back
to top
IF
ONE IS A MEMBER OF YOUR EMPLOYER'S PENSION AND PROVIDENT
FUNDS, ARE YOU ALLOWED TO TRANSFER THE RESPECTIVE BENEFITS
TO DIFFERENT PRESERVATION FUNDS?
If
you are a member of your employer's pension and provident
funds, the benefit in respect of each fund can be treated
individually and may be transferred to different
preservation funds, i.e. the pension fund benefit will be
transferred to a preservation pension fund and the
provident fund benefit will be transferred to a
preservation provident fund.
back
to top
MAY
ONE MAKE ONGOING CONTRIBUTIONS TO PRESERVATION FUNDS?
No,
as preservation funds may only receive payments in the
form of direct "translocation" (transfer)
payments from an employer's pension or provident fund and
member contributions may not be received.
back
to top
IF
A PENSION FUND IS CONVERTING TO A PROVIDENT FUND, WILL
MEMBERS BE ALLOWED TO TRANSFER THEIR BENEFITS TO
PRESERVATION FUNDS?
Members
are specifically prohibited from transferring their
benefits to preservation funds during a conversion from a
pension to a provident fund. This prohibition is in terms
of a practice note issued by the South African Revenue
Service, RF 1/98, which deals with preservation funds.
back
to top
IF
ONE RETIRES FROM EMPLOYMENT, ARE YOU OBLIGED TO RETIRE
FROM YOUR PRESERVATION FUND TOO?
Yes.
In terms of RF 1/98, members who retire from employment
must at the same time retire from their preservation
funds. The reason for this is that the South African
Revenue Service is of the opinion that one can only retire
once and you therefore have to take retirement in terms of
your preservation funds too.
A
member who is not in employment and who wishes to take a
retirement benefit from the preservation fund may do so
before reaching the age of 70 years, but not before age
55.
back
to top
MAY
I TAKE MY R1 800 TAX-FREE BEFORE TRANSFERRING MY
RETIREMENT FUND BENEFIT TO A FUND?
RF
1/98 requires that the gross benefit be transferred to the
preservation fund. Addendum A to RF 1/98 states further
that the only ways in which a retirement fund benefit may
be reduced prior to transfer to a preservation fund is
when there is a section 37D reduction, a divorce order
deduction or a transfer to a retirement annuity.
You
will therefore not be able to take your R 1 800 tax-free
before transferring the balance to a preservation fund.
You will only be able to take the R1 800 after the benefit
has been transferred to a preservation fund, which will
mean that you will be utilising your one and only
withdrawal.
back
to top
CAN
ONE TRANSFER RETIREMENT BENEFITS TO OVERSEAS COUNTRIES AND
FROM OVERSEAS COUNTRIES INTO SOUTH AFRICA FREELY?
Retirement
benefits can be transferred into the country freely.
Payments to a bank account in an overseas country are
another matter. Monthly pensions are currently subject to
formal exchange control approval, which is readily
granted. Lump sum payments form part of an emigrant's
settling in allowance. Any balance has to be placed in
blocked Rands in the member's blocked bank account.
back
to top
|
