Old Mutual Corporate expects clarity on retirement savings

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Du Toit says that select retirement fund reform outcomes planned for 2015 have been delayed to 2016, and possibly 2017. "It is encouraging that discussions around retirement reforms are still taking place between government and industry, and Old Mutual Corporate welcomes the implementation of reforms in the near future due to the positive and concrete step these will have in contributing to improving savings levels and income during retirement in South Africa."

Du Toit adds that more steps need to be taken to effectively promote efficient retirement savings, and expects the budget speech to provide further clarity on some of the proposals that have been under discussion.

Tax changes

"Useful clarity may come in the form of final implementation plans for taxation changes affecting contributions, certain aspects of the tax free savings vehicle, mandatory preservation and implementation thereof, possible proposals on post retirement aspects of the reforms, such as default annuities, or even on the potential national savings fund.

"One of the concerns from a savings point of view would be possible increases in taxes on interest, dividends or capital gains, particularly if they affect investment growth, as this may have a unfavourable impact on the propensity to save," says Du Toit.

Du Toit adds that initiatives to educate South Africans on the growing need to save should be identified. "Old Mutual Corporate would support government in dedicating resources, or partnering with the private sector on educational campaigns focusing on the importance of saving for retirement, and transforming society from a spending culture to a savings culture, not just for retirement, but as part of South Africans lifestyles in general."