Govt proposes to promote savings

2012-10-04 21:00

Cape Town - The National Treasury released two papers on promoting household savings for public comment and consultation on Thursday. The two papers, Incentivising non-retirement savings, and Improving tax incentives for retirement savings are available from the National Treasury website (


At its 19 September 2012 meeting, the Cabinet noted that the promotion of household savings and the reform of the retirement industry were aimed at assisting and incentivising South African households to save more, particularly for their retirement, and to better preserve and grow their pensions.

Incentivising non-retirement savings

This paper proposes a non-retirement savings product which is supported by tax incentives. The aim of the savings product is to support voluntary savings by households and complement retirement savings.

The paper proposes:

- Tax free returns, growth and withdrawals;

- Limiting contributions to R30 000 per year and R500 000 over the lifetime of an individual. These limits may be adjusted from time to time to take into account inflation.

- Expanding on the current tax-free interest income regime by replacing it with products that will offer more investment options.

Improving tax incentives for retirement savings

This paper proposes to simplify the current tax regime by harmonising the tax treatment of contributions to retirement funds. Proposals to simplify the current regime and thereby address its deficiencies were initially announced in the 2011 and 2012 Budgets.

The paper proposes that:

- Contributions by employers to retirement funds remain tax deductible for taxable employers;

- Employer contributions be taxed as a fringe benefit in the hands of the employee; and

- Employee contribution, for tax purposes, be deemed to be made up of both the employee and the employer contributions, and the total contribution be capped at R250 000 or 22.5% of taxable income for taxpayers 44 years and younger. A cap of R300 000 or 27.5% of taxable income will apply to those aged 45 years and above.

The closing date for comment on these two papers is 30 November 2012. Comments on these papers can be submitted as follows:

- Submissions on the Incentivising non-retirement savings paper can be addressed to: Mr Johan Lamprecht, Director: Economic Tax Analysis, Private Bag X115, Pretoria, 0001; or by fax to 012 315 5516; or by email to

- Submissions on the Improving tax incentives for retirement savings paper can be addressed to: Ms Beatrie Gouws, Director: Legal Tax Design, Private Bag X115, Pretoria, 0001; or by fax to 012 315 5516; or by email to

  • hartmut.gneiting - 2012-10-04 22:12

    in case anyone is interested, we had after the war in Germany where you could save up to say +/- R 12.000 a year, and then you could choose, to get either a 25% bonus into your savings, or you could deduct the amount from your taxable income. That way also the poorer people got a real incentive. The money had to be accumulated on a regular basis and was running on 5 years contracts with very competitive interest rates. What abou that? Would be a start.

  • henk.vanrensburg.31 - 2012-10-04 22:17

    Capped at R300k? WTF!!

  • barry.w.ferreira - 2012-10-04 23:36

    Hey, I'd love to save money. There's just the pesky problem of the ridiculous fuel and food price holding me back. If we had good public transport in Johannesburg it would really help.

  • emmanuel.roodt - 2012-10-05 03:21

    What about allowing us the public to borrow money directly from the South African Reserve Bank, thus cutting out the high interest asked by our local banks. From here we could be adding more to our pensions and the interest on a house over 20 -30 years will be way LESS!!?

  • arno.pfohl - 2012-10-05 07:40


  • arno.pfohl - 2012-10-05 07:55

    Government Monetary policy does not exist, the poor people have become poorer and the rich have become richer. This is the underlying effect of reduced interest rates by the Reserve Bank. Increase the interest rate => reduces cash in economy => reduces demand on goods and services => PRICES DROP. Yes, it will be a difficult transition but I fear we are at a point that inflation is already spiralling out of control. Today I am stocking up on cereals, oats and other staple food types, because I know its going to get more expensive in the next PRICE SHOCK!!

      arno.pfohl - 2012-10-05 08:17

      Lastly who wants to save when bank interest rates are either on par or below inflation. Are these these guys serious? They just want people to save to produce the same effect as to increase interest rates by reserve bank to limit the amount of money in the economy. Ohnestly I think they should get ....(leave that to your imagination)

  • dewalds3 - 2012-10-05 08:10

    Yes, we save and save, we forfeit nice cars,restaurant lunches, take-aways and cocktails until one day we can invest in a property, which we can use for an extra income. Then we are told we stole the property from someone with a different skin colour.. Much better to save offshore where sane people are in control!

  • ngoako.mathekga - 2012-10-05 08:23

    Taxing employer's contributions is like taking 100 steps back, it is a big NO!

  • GerhardVO - 2012-10-05 09:47

    If they gave us a free-market interest rate, not kept artificially low by the despotic banking system, then we would have saved more. Currently most people's savings are eroded by negative real interest rates and high banking fees. Curiously, reforms of pension funds usually allow governments to borrow more by 'nationalising' savings and forcing funds to buy state bonds. Then they tax us more to cover interest on government debt: See this article: and this one:

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