Question:
I resigned (effective on 30 September 2007) and withdrew my pension from my pension fund.

Is there any chance to apply for a tax refund based on a lower tax rate on pension funds now (given the recent tax rule changes and the fact that my savings were accrued over the previous 20 years)?

Answer:
Unfortunately this change was not made retrospectively. Imagine the admin nightmare for SARS if it were, and the cost of all those refunds! So, no, there is no chance at all of getting a refund.

The tax rate applicable to the withdrawal is as per the tax rate at that date, in this case the 2007/8 tax year. The new tax benefit will only be applicable to those withdrawals made in the 2009/10 tax year.

It is unfortunate that for the last 20 years or more people diligently saving towards their pension have been taxed more than the current and new members, but at least going forward the pension fund tax reforms are improving the potential of funds available to the nation at retirement.

It has been a serious concern for a long time that not enough South Africans are retiring with enough provision. Let?s hope that the current statistic of only about six percent of people retiring self sufficient will improve drastically.

acsis Limited is an authorised financial services provider. The response to the question covers some of the issues in a general and factual manner and does not constitute advice. It is important to consult with a financial planner who, after an analysis of the individuals? personal needs, goals and circumstances, will be able to provide comprehensive and appropriate advice.