Moneyweb reports that the Taxation Law Amendment Act of 2020 was signed into law by President Cyril Ramaphosa on 20 January 2021.  

This has enacted the long-awaited legislation which provides for the same annuitisation rules that apply to members of pension funds, pension preservation funds and retirement annuity funds, to be applied to members of provident funds and provident preservation funds, after 1 March 2021 (T Day).  However, the legislation protects the accrued rights of members of provident funds and provident preservation funds (i.e. ‘these funds’) as at T day.  A distinction is made between ‘vested benefits’ and ‘non-vested benefits’.  In respect of ‘vested benefits’, on retirement members of ‘these funds’ who are under age 55 on T day will still be permitted to take amounts which accrued before T day plus fund return in cash.  Moreover, members over age 55 on T day will have access to all amounts in the fund in cash on retirement from that fund.  Amounts that are subject to the annuitisation rules will be termed ‘non-vested benefits’.  The annuitisation rules will apply to the non-vested benefits of all pre-retirement funds going forward.  Fund administrators will have to keep separate records of amounts in funds which apply to the vested benefits and non-vested benefits which emanated from ‘these funds’ as at T day. This will not only be required in ‘these funds’, but will apply to all funds. When members of ‘these funds’ transfer benefits to other approved funds, records of the vested benefits will need to be kept in the new fund and administrators will need to keep separate records of vested and non-vested benefits.  This article goes on to explain the distinction in considerable detail.

• Read the full original of the report in the above regard by Jenny Gordon at Moneyweb <https://www.moneyweb.co.za/mymoney/moneyweb-tax/provident-fund-annuitisation-kicks-in-from-march/>

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