What is T Day and what do you need to know
29 April 2021
One of the main features in Finance Minister Tito Mboweni’s 2021/2022 Budget speech was the new laws pertaining to retirement reforms. The main objective of these changes was to ensure that you have sufficient income to support you during retirement and minimising lump sum pay-outs to secure cash reserves for the retirement years ahead.
These changes were proposed to be brought into effect in March 2015, however the legislation required further reviews and changes to the retirement fund industry controlling laws. The finalisation of the harmonising of the National Treasury’s extended retirement reform initiatives Taxation Laws Amendment Act 23 of 2020 (TLAA 2020) was promulgated on 20 January 2021 and formally implemented on 1 March 2021, referred to as T-day.
T-day simplified and how it will affect you is as follows:
- T-day rules will not be applicable to individuals who were 55 years or older on 1 March 2021, providing that they remain members of their current provident/preservation fund.
- T-day rules only affect the way in which provident fund or provident preservation funds retirement benefits are paid.
- All cash in savings may still be withdrawn before retirement- there are no changes to early withdrawals.
- Provident funds/provident preservation funds retirement benefits will be governed by the same rules as pension funds as from 1 March 2021.
- Retirement benefits/member share will be allocated to two share portions: Vested Member Shares and Non-vested Member Shares.
CLICK HERE TO SEE THE IMPACT OF T-DAY ON YOUR PROVIDENT/PENSION PRESERVATION FUND