Many South Africans may not have adequate retirement savings when they retire and this has the effect of a low income replacement ratio on retirement that may lead to a decrease in the standard of living of the retiree and in extreme cases the retiree becoming dependent on their family and the government. Owing to this trend of no or inadequate retirement savings, South Africa embarked on a retirement reform journey in 2004. The goal of this research is to determine whether the retirement reform mechanisms outlined by National Treasury would encourage individual retirement savings that should assist South Africans to achieve stability of income in their retirement. This research analysed the current retirement savings options and vehicles available for South Africans, the current tax incentives and disincentives and reviewed the proposed changes to tax incentives and disincentives during the accumulation phase of retirement savings and explained how these proposed tax incentives are harmonised for the accumulation phase of retirement. The research explained how National Treasury aims to limit pre-retirement withdrawals and how it intends to encourage the annuitisation of post-retirement benefits. The penultimate chapter of this research measured the effect (by making certain assumptions) of the changes proposed by National Treasury on the income replacement ratio of the retiree. Throughout the research comparisons were made between The OECD Roadmap for the good design of defined contribution pension plans and National Treasury’s proposals. This research did not directly address the effect of increased life expectancies on retirement savings or increases in youth unemployment and the effect that this may have on retirement savings. The effect of financial charges levied on retirement savings on the income replacement ratio of a retiree was also not explored. Furthermore, not all pension funds are regulated by the Pension Funds Act and how these pension funds can be brought within the purview of the Pension Funds Act was not investigated. Automatic enrolment of retirement savings for all employees in South Africa in retirement vehicles is a further research area that could be addressed.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:rhodes/vital:913 |
| Date | January 2015 |
| Creators | Hirschbeck, Lisa |
| Publisher | Rhodes University, Faculty of Commerce, Accounting |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Masters, MCom |
| Format | 161 leaves, pdf |
| Rights | Hirschbeck, Lisa |
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