Budget Speech Brings About Significant Changes in SA Retirement Fund Industry

February 25 - The Managing Director of OMAC Actuaries and Consultants, Craig Aitchison, said that the budget for 2011 shows a well thought out approach to social reform for the next few years.

Finance Minister Pravin Gordhan gave his budget speech for 2011 and it can be clearly understood that both the retirement fund industries and the healthcare industries will be affected.

"We are finally starting to see the finality on the major reforms we have been waiting for and discussing for many years," said Aitchison.

"It's definitely the beginning of significant changes, particularly in the retirement funding industry."

As such, South Africans can expect to feel changes in the taxation of their pension funds, for example.

The government announced its intentions to introduce a compulsory savings scheme for South Africans and will issue a proposal to encourage preservation.

"The proposal to limit withdrawals from provident funds to one third lump sum will also have a big impact on the level of preservation in the industry," said Aitchison.

The scope and authority of the FSB and other South African financial services regulators will be broadened as well.

Analysts are satisfied with the fact that the social security framework has achieved much deserved attention on an holistic level.

"It seems there is a very clear framework that involves reforms to medical services, education, UIF, the Road Accident Fund and retirement benefits," said Aitchison.