RETIREMENT MATTERS 1 OF 2026
Revenue Laws Amendment Act 2025
The Revenue Laws Amendment Act, 6 of 2025, was promulgated on 24 December 2025.
It introduces a number of clarifications affecting provident and provident preservation fund members who were 55 years or older on 1 March 2021:
- Where such a member elects to participate in the two‑pot system (which they had to do before 1 September 2025), the seeding amount must be calculated based on the value of the member’s vested component as at:
- 31 August 2024, or
- the last day of the month in which the election was made, depending on what is provided for in the fund rules.
- Only a member of a provident fund who was 55 or older on 1 March 2021 and who remains a member of the same provident fund is excluded from the two‑pot system.
- The requirement above does not apply to provident preservation fund members. A provident preservation fund member who was 55 or older on 1 March 2021 remains excluded from the two‑pot system, even if they are no longer a member of the same fund as at that date.
A technical correction clarifies that any amount paid from the savings component on a member’s death will be taxed as a retirement fund lump sum benefit.
These changes are deemed to have come into operation on 1 September 2024.
2026 Budget Review proposals affecting retirement funds
- Retirement fund contribution deduction limits
Previously, members contributing to a retirement fund may receive a tax deduction for contributions made to a retirement fund of up to 27.5% on the greater of remuneration or taxable income, but not more than R350 000 per annum. This means that a member may not deduct contributions for tax purposes of more than the annual limit of R350 000. This amount was increased to R430 000 effective 1 March 2026.
- Retirement interest de minimis (commutation) threshold for annuitisation
Previously, at retirement, the total value in the retirement component plus the portion of the vested component that must be taken as an annuity (also referred to as the non-vested portion, which is typically 2/3’s of the value in a pension fund), must be paid in the form of an annuity, except if that combined value does not exceed R165000 (de minimis amount), in which case it can be taken in cash. This de minimis was increased to R240 000 effective 1 March 2026.
- Living annuity commutation
The full remaining value of a living annuity may be paid in a lump sum when the value at any time becomes less than the amount prescribed by the Minister of Finance. The previous prescribed amount of R125 000 was increased to R150 000.
The Taxation Laws Amendment Act 2026
The Taxation Laws Amendment Act, 5 of 2026 was promulgated on 1 April 2026. From a retirement fund perspective, apart from certain technical corrections, the following is of note:
- Savings withdrawal benefit on termination of membership
In terms of the current definition of “savings withdrawal benefit” in the Income Tax Act, where a member has already made a withdrawal from the savings component during the tax year, such member may only withdraw the balance on termination of membership if the savings component is less than R2 000. This is amended so that a member may on termination of membership, withdraw the balance in the savings component irrespective of the amount thereof and irrespective of any savings withdrawal benefit already taken in the same tax year.
This means that a member can always take their full savings component when they leave the fund. However, this does not apply where a member’s membership of the fund is not terminated, even if the member ceases to be an employee.
This amendment came into operation on 1 March 2026.
- Taxation of divorce rewards under religious tenets
The amendments to the Pension Funds Act with regard to section 37D, which was promulgated together with the two-pot system changes, made it possible for former spouses to also claim a portion of pension interest of a member in terms of the tenets of a religion, for example where Muslim marriages are dissolved.
However, the Income Tax Act has not been similarly updated and does not include such orders, which created tax uncertainty.
Similar wording is now added to the Income Tax Act to deal with the tax treatment of those amounts assigned to former spouses under the tenets of a religion.
This amendment is deemed to have come into operation on 1 September 2024.
- Payment of death benefits from the savings component
Paragraph (g) of the definition of “savings component” in the Income Tax Act is amended to clarify that any amount paid to a dependant or nominee upon the death of a member does not constitute a savings withdrawal benefit but should be taxed as a retirement fund lump sum benefit. The intention remains that beneficiaries have the flexibility to elect a lump sum or annuity payment.
This amendment is deemed to have come into operation on 1 September 2024.
- Once-off withdrawal from the vested component by a member of a preservation fund upon ceasing to be a tax resident
The definitions of “pension preservation fund” and “provident preservation fund” in the Income Tax Act are amended to clarify that, provided that a member of a preservation fund has not yet made a once-off withdrawal from the vested component, such member does not have to be non-resident for three years before being able to make a withdrawal from the vested component. The three-year requirement in other words only applies where the member has already made a once-off withdrawal.
This amendment is deemed to have come into operation on 1 September 2024.
Information Regulator launches POPIA monitoring exercise
The Information Regulator has commenced a structured POPIA compliance monitoring exercise, requiring selected organisations, including retirement funds, to formally demonstrate compliance within 14 business days of notification.
The selected organisation will be notified by the Information Regulator and will be required to submit a POPIA compliance report, with supporting documentation covering lawful processing, direct marketing practices, cross‑border data transfers, policies, training, risk management and incident response.
The Information Regulator may also conduct onsite inspections.
While this is a monitoring exercise, material non‑compliance may result in enforcement action, including administrative penalties, civil liability or criminal sanctions.
Funds should ensure that their POPIA frameworks and records are up to date and readily accessible.
Ombud Council – New Rules for the Pension Funds Adjudicator
The Ombud Council published the final Ombud Council Rules for the Pension Funds Adjudicator (Adjudicator) on 4 March 2026.
The Rules were issued under the Financial Sector Regulation Act and give binding effect to the procedural framework previously consulted on. The final Rules do not introduce material changes to the Adjudicator’s complaint‑handling approach and do not impose new obligations on funds, employers or other stakeholders.
The Rules largely formalise existing practices and provide greater procedural clarity, fairness and efficiency. Key aspects include clearer processes for complaint handling and dismissal, consequences for non‑cooperation (including default determinations), confirmation of powers relating to costs, interest and time limits, enhanced conciliation and settlement mechanisms, and strengthened coordination between the Adjudicator, the FSCA, the Ombud Council and other ombud schemes.
The Rules will be implemented in a phased approach to allow for operational readiness. Provisions that align with current practice became effective on 4 March 2026, while Rules requiring process changes will come into operation at a later stage to allow sufficient time for implementation.
The Rules will be implemented as follows:
- Certain provisions aligned with current practice became effective on 4 March 2026.
- Rule 10, dealing with costs and interest, comes into operation on 1 October 2026.
- Provisions dealing with cooperation and liaison arrangements also become effective on 1 October 2026.
- Rule 7, dealing with settlement and conciliation, comes into operation on 1 April 2027.
Overall, the Rules seek to promote a more transparent, consistent and efficient dispute‑resolution framework.
FSCA Prudential Standard 1 of 2026 – Requirements related to regulatory reporting and audited financial statements
The FSCA published Prudential Standard 1 of 2026 on 31 March 2026.
The Standard sets out the requirements for a new regulatory reporting framework and for audited financial statements for retirement funds. It aims to modernise and consolidate existing reporting requirements and to enhance governance and transparency.
The effective date will be published at a later stage.
The Prudential Standard provides a framework, while the detailed reporting templates will be issued separately. Draft templates are expected to be released for consultation in June 2026.
Promotion of Access to Information Act (PAIA) – Reporting
Information Officers are required to report on the number of PAIA requests for information received by their funds on an annual basis. The report for the financial year from 1 April 2025 to 31 March 2026 has become due. Submissions have been opened on the website of the Information Regulator eServices: Information Regulator (inforegulator.org.za) from 1 April 2026 and will close on 30 June 2026.
Funds must submit their reports before 30 June 2026 to remain compliant with legal requirements, even if no PAIA requests were received. No extensions will be granted.
Pension Lawyers Association (PLA) conference
At the annual PLA conference held on 24 and 25 March 2026, the FSCA and the Office of the Pension Funds Adjudicator (OPFA) provided the following feedback:
- The COFI Bill is currently before Parliament and is expected to be promulgated during 2026. Subsequent to this, Cabinet approved the submission of the COFI Bill on 1 April 2026. The publication of the draft for consultation is now awaited.
- The OPFA continues to experience a significant increase in complaints, with volumes expected to rise further.
- Funds and administrators are expected to cooperate fully with the OPFA, including submitting timeous and complete responses. The OPFA will issue a summons/subpoena, served by the Sheriff, where funds fail to file a response.
- The OPFA will, going forward, award costs where appropriate.
Q&A
Q: How does the recent withdrawal of an exemption from certain provisions to the Basic Conditions of Employment Act (BCEA) affect the timing of retirement fund contributions, and how does this differ from section 13A of the Pension Funds Act?
A: From 13 January 2026, in terms of the BCEA, contributions deducted from employees’ salaries must be paid within 7 days of such deduction, while employer contributions must be paid within 7 days after the relevant pay period. Employers must therefore pay member contributions within 7 days of the payroll run.
Section 13A of the Pension Funds Act still requires payment of both member and employer contributions within 7 days after month-end.
Employers must now comply with both laws, meaning payroll timing under the BCEA can result in earlier payment deadlines and additional enforcement through labour inspectors.