How are pension funds taxed in South Africa?
Any lump sum withdrawn at retirement above a minimum threshold (currently R25 000) is taxable. Between R25 000 and R660 000, the tax rate is 18%, between R660 000 and R990 000 it is 27%, and over R990 000, it is 36%.
Does Regulation 28 apply to living annuities?
Living annuity investors are currently not subject to Regulation 28 of the Pension Funds Act, which mean that there are no prescribed investment limitations as in the case of a Retirement Annuity investment.
When did Regulation 28 start?
The revised Regulation 28 became effective on 1 July 2011. The Financial Services Board had subsequently provided an extension for compliance to 31 December 2011, to allow retirement funds and their service providers time to implement the necessary systems and contractual changes.
Are SIM Managed Solution funds Regulation 28 compliant?
Fund Objective This fund is Reg. 28 compliant and may hold up to 30% of its assets offshore.
What is the tax rate on pensions?
For example, withholding tax on periodic pension income you receive is often taxed at a rate of 15%.
What does Regulation 28 to the Pension Funds Act deal with?
Regulation 28 is issued under the Pension Fund Act. It limits the extent to which retirement funds may invest in particular assets or in particular asset classes. The main purpose is to protect the members’ retirement provision from the effects of poorly diversified investment portfolios.
Do you pay tax on a living annuity?
No tax is payable on amounts transferred into your living annuity and you do not pay tax on the investment returns you earn within your living annuity. Your living annuity income is taxed according to the prevailing personal income tax table, assuming that this is your only income.
Who does regulation 28 apply to?
Regulation 28 applies to pension, provident and retirement annuity funds, and essentially limits asset managers’ allocations of retirements savings to certain assets classes, including equities, property, and foreign assets.
What is a Regulation 28 compliant fund?
Regulation 28 is part of the Pension Funds Act and its purpose is to protect investors against poorly diversified investment portfolios, and ostensibly aims to ensure that investors’ hard-earned money is invested in a sensible way without too much exposure to risky assets.
How do you calculate the taxable portion of a pension?
Determining the tax-free portion of a pension The dollar amount is determined by dividing the total amount of your previously taxed contributions (you can find this amount on your IMRF Certificate of Benefits) by the number of pension payments you can expect to receive.
What is Regulation 28 of the Pension Fund Act?
Regulation 28 is issued under the Pension Fund Act. It limits the extent to which retirement funds may invest in particular assets or in particular asset classes.
How does regulation 28 affect investment in South Africa?
On the downside, investing in a Regulation 28 compliant fund means that 70% of your assets must be invested in South African assets which, given the rate at which the number of listed companies on the JSE has shrunk over the past few years, means that investors have limited choice when it comes to investing in local companies.
What is the main purpose of regulation 28?
Regulation 28. The main purpose is to protect the members’ retirement provision from the effects of poorly diversified investment portfolios. This is done by limiting the maximum exposure to more risky asset classes, making sure that no unnecessary risks are taken with retirement money.
What are the asset class limits of regulation 28?
The most important Regulation 28 asset class limits are as follows: – Equity 75% – Listed Property 25% – Offshore Assets 30%* – Hedge funds 10%. *As prescribed by the South African Reserve Bank. For each investment fund the maximum possible exposure to a restricted asset class is provided according to its investment mandate.