Major changes to the structuring of the retirement industry appear unlikely to be completed in time for next year's budget.
The timetable hung in the air this week even though government has announced it is setting up a forum to come up with a final plan.
The plan will have a major impact on your retirement planning from your first salary cheque through to actual retirement.
Gill Marcus, Deputy Minister of Finance, told Personal Finance this week that taxation and other changes recommended by the Katz commission of inquiry into the taxation structure and the Smith committee of inquiry into the retirement industry "may or may not be" introduced in the new budget.
She said the objective was not the budget, but to set out a proper government policy for the retirement industry for the future.
The government wants retirement and health industry experts to attend forum, which will meet early in January.
Marcus said: "We are asking people in the industry who have analysed the Katz and Smith reports to bring their research to the forum."
The forum will be given the additional task of looking at the associated medical aid industry, which is having an increasing impact on retirement.
Marcus says all affected government departments, including the Department of Health, which is involved in putting together a national heath provision scheme, will be included in the forum.
At the initial meeting working groups will be set up to make recommendations to a plenary session that will be held in February.
Marcus said the recommendations will then be used to enable government to "arrive at a national retirement provision policy, which has been broadly canvassed with all major stakeholders".
Major issues which are on the table include:
* The 17 percent tax on the interest and rental income of retirement funds, which has effectively reduced retirement benefits. Proposals were made by Katz that this tax could go as high as 30 percent;
* The removal of the tax differences between the private sector and the public sector, with the public sector currently receiving tax free lump sums;
* A unitary retirement fund structure with no difference in tax treatment between provident, pension and retirement annuity funds;
* The taxing of full fund benefits at retirement but with an incentive for people to take a monthly pension rather than a lump sum;
* Social pensions; and
* The underfunding of the public service and parastatal pension funds.
Reg Munro, Old Mutual general manager in charge of employee benefits and a member of the Smith committee of inquiry, says he is delighted that "there is now action" but he is dubious about the forum completing its work within six weeks of the first meeting.
He expressed concern that a piecemeal approach could be adopted.
It was important that an integrated approach be taken to the issue. This had been the problem in attempting to implement parts of the Katz commission recommendations on taxing the retirement industry.
However, Munro said that he felt there was a fair deal of consensus, but that the trade unions could bring more issues to the discussions.
