“Pension fund” definition of section 1 of ITA

“pension fund” means –

(a)

(i) any pension or dependants’ fund or pension scheme established by law, other than the Government Employees Pension Fund, as contemplated in the Government Employees Pension Law, 1996 (Proclamation No. 21 of 1996);

[Sub-paragraph (i) substituted by section 7(1)(o) of Act 17 of 2009 and by section 3(1)(k) of Act 25 of 2015, substituted by section 74(1)(a) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]

(ii) any pension, provident or dependants’ fund or pension scheme established for the benefit of the employees of any municipality or of any local authority (as defined in the definition of “local authority” in this section prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006 (Act 20 of 2006), that was established prior to the date that section so came into operation); or

[Sub-paragraph (ii) substituted by section 3(1)(k) of Act 20 of 2006 and by section 7(1)(o) of Act 17 of 2009 – pending amendment by section 3(1)(l) of Act 25 of 2015 deleted by section 74(1)(b) of Act 23 of 2020 deemed effective on 8 January, 2016]

(iii) any fund contemplated in subparagraph (ii), which includes as members employees of any municipal entity created in accordance with the provisions of the Municipal Systems Act, 2000 (Act No. 32 of 2000), over which one or more municipalities or local authorities (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) exercise ownership control as contemplated by that Act, where such fund was established –

(aa) on or before 14 November 2000, and such employees were employees of a local authority (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) immediately prior to becoming employees of such municipal entity; or

(bb) after 14 November 2000, and such fund has been approved by the Commissioner subject to such limitations, conditions and requirements as contemplated in paragraph (c);

(b) effective on a date determined by the Commissioner in relation to any fund hereinafter referred to (not being a date earlier than 4 December 1981), any pension fund established for the benefit of employees of a control board as defined in section 1 of the Marketing of Agricultural Products Act, 1996 (Act 47 of 1996), or for the benefit of employees of the Development Bank of Southern Africa, if the rules of such fund are in all material respects identical to those of the Government Employees’ Pension Fund; or

[Paragraph (b) substituted by section 2(1)(c) of Act 96 of 1985, by section 2(1)( j) of Act 28 of 1997 and by section 3(1)(m) of Act 25 of 2015 effective on 1 March, 2016 and applicable in respect of years of assessment commencing on or after that date]

(c) the Municipal Councillors Pension Fund provisionally registered under the Pension Funds Act on 23 May 1988, or any fund (other than a retirement annuity fund, a pension preservation fund or a fund contemplated in paragraph (a) or (b)) which is approved by the Commissioner in respect of the year of assessment in question and, in the case of any such fund established on or after 1 July 1986, is registered under the provisions of that Act;

[Paragraph (c) amended by section 2(1)(c) of Act 65 of 1986, by section 1(1) of Act 99 of 1988, by section 2(1)(b) of Act 101 of 1990, by section 2(1)(i) of Act 113 of 1993, by section 2(d) and (e) of Act 21 of 1995, by section 2(g) of Act 59 of 2000, by ss. 2(2)(b) and 3(1)(f) of Act 8 of 2007, by section 2(1)(t) and (u) of Act 3 of 2008, by section 4(1)(k), (l), (m) and (n) of Act 60 of 2008, by section 6(1)(r) of Act 7 of 2010, by section 7(1)(z) of Act 24 of 2011, by section 4(1)(zC) and (zD) of Act 31 of 2013 (section 4(1)(zE) of Act 31 of 2013 substituted by section 119(1)(a) of Act 43 of 2014 and deleted by section 143(1)(a) and section 155(1) of Act 25 of 2015 respectively), by section 3(1)(n) of Act 25 of 2015, by section 2(1)(f) and (g) of Act 17 of 2017, by section 1(1)(j) and (k) of Act 23 of 2018 and by section 1(1)(f) of Act 20 of 2022]

(d) the Government Employees Pension Fund, as contemplated in the Government Employees Pension Law, 1996 (Proclamation No. 21 of 1996):

[Paragraph (d) added by section 3(1)(o) of Act 25 of 2015 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date – effective date in section 3(7) of Act 25 of 2015 substituted by section 3(1)(b) of Act 2 of 2016 as substituted by section 98(1) of Act 17 of 2017 and by section 111(1) of Act 23 of 2018]

Provided that the Commissioner may approve any fund contemplated in paragraph (c) subject to such limitations or conditions as he may determine, and shall not approve a fund in respect of any year of assessment unless the Commissioner is in respect of that year of assessment satisfied-

(i) that the fund is a permanent fund bona fide established for the purpose of providing annuities on retirement date or for the dependants or nominees of deceased employees, or mainly for the said purpose and also for the purpose of providing benefits other than annuities for the persons aforesaid or for the purpose of providing any benefit contemplated in the definition of “savings withdrawal benefit”, paragraph 2C of the Second Schedule or section 15A or 15E of the Pension Funds Act; and

[Paragraph (i) substituted by section 1(1)(d) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]

(ii) that the rules of the fund provide-

(aa) that all annual contributions of a recurrent nature to the fund shall be in accordance with specified scales;

(bb) that membership of the fund throughout the period of employment shall be a condition of the employment by the employer of all persons of the class or classes specified therein who enter employment with that employer on or after the date upon which-

(A) the fund comes into operation; or

(B) the employer becomes a participant in that fund;

(cc) those persons who immediately prior to the said date were employed by the employer and who on the said date fall within the said class or classes may, upon application made, be permitted to become members of that fund on such conditions as may be specified in the rules;

(dd) that not more than one-third of the portion of the member’s interest in the vested component may be commuted for a single payment, and that the remainder, calculated together with the member’s interest in the retirement component, must be paid in the form of an annuity (including a living annuity), a combination of annuities (including a combination of methods of paying the annuity) or a combination of types of annuities except where two-thirds of the member’s total interest in the vested component, calculated together with the member’s total interest in the retirement component, does not exceed R165 000, where the employee is deceased or where the employee elects to transfer the retirement interest to a pension preservation fund, provident preservation fund or a retirement annuity fund: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account-

(A) in the case of a person who was a member of a provident fund or provident preservation fund and who was 55 years of age or older on 1 March 2021-

(AA) any amount contributed to a provident fund or transferred to a provident preservation fund prior to, on and after 1 March 2021 of which that person was a member on 1 March 2021;

(BB) with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on and after 1 March 2021; and

(CC) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (AA) or amounts credited contemplated in subparagraph (BB); or

[Subparagraph (CC) substituted by section 1(1)(c) of Act 17 of 2023 effective on 1 March, 2022 and is applicable in respect of years of assessment commencing on or after that date]

(B) in any other case of a person who was a member of a provident fund or provident preservation fund on 1 March 2021-

(AA) any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021;

(BB) with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021; and

(CC) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (AA) or amounts credited contemplated in subparagraph (BB);

[Subparagraph (CC) substituted by section 1(1)(d) of Act 17 of 2023 effective on 1 March, 2022 and is applicable in respect of years of assessment commencing on or after that date]

reduced proportionally by an amount permitted in terms of the Pension Funds Act to be deducted from the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on and after 1 March 2021: Provided further that in the case where the remaining balance is utilised to provide or purchase more than one annuity, the amount utilised to provide or purchase each annuity must exceed R165 000;

[Subparagraph (dd) substituted by section 4(1)(f) of Act 20 of 2021 and amended by section 1(1)(b) of Act 17 of 2023 and by section 1(1)(e) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]

(ee) that a partner of a partnership is regarded as an employee of the partnership;

[Subparagraph (ee) substituted by section 1(1)(e) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]

(ff) that the Commissioner shall be notified of all amendments of the rules; and

(gg) that an employee who has transferred a retirement interest in terms of paragraphs 2(1)(c) and 6A(d) of the Second Schedule to this fund shall not be entitled to payment of a withdrawal benefit as contemplated in paragraph 2(1)(b)(ii) of the Second Schedule in respect of that transferred amount; and

[Subparagraph (gg) added by section 1(1)(f) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]

(iii) that the rules of the fund have been complied with;

: Provided further that the Commissioner may recognise a fund contemplated in paragraph (a), (b) or (d) in respect of any year of assessment if the Commissioner is satisfied that the rules of the fund provide that in determining the value of retirement interest, an amount calculated as follows must not be taken into account-

(i) in the case of a person who was a member of a provident fund or a provident preservation fund and who was 55 years of age or older on 1 March 2021-

(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to, on and after 1 March 2021 of which that person was a member on 1 March 2021;

(bb) with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021; and

(cc) where applicable, any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (aa) or amounts credited as contemplated in subparagraph (bb); or

(ii) in any other case of a person who was a member of a provident fund or a provident preservation fund on 1 March 2021—

(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021;

(bb) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021; and

where applicable, reduced proportionally by any amount permitted to be deducted in terms of the Pension Funds Act from the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021;

Provided further that the Commissioner may approve or recognise a fund contemplated in-

(i) paragraph (a), (b), (c) or (d) in respect of any year of assessment, if the Commissioner is satisfied that the rules of the fund provide-

(aa) for the creation of the “savings component”, “retirement component” and “vested component” as defined in section 1;

(bb) that an employee may, prior to his or her retirement date, elect to receive the payment of-

(A) an amount from the retirement component, deemed to be paid as a lump sum benefit contemplated in para-graph 2(1)(b)(ii) of the Second Schedule, where a member—

(AA) is a person who is not a resident for an uninterrupted period of three years or longer on or after 1 March 2021;

(BB) departed from the Republic at the expiry of a visa obtained for the purposes of-

(AAA) working as contemplated in paragraph (i) of the definition of “visa” in section 1 of the Immigration Act, 2002 (Act 13 of 2002);

(BBB) a visit as contemplated in paragraph (b) of the definition of “visa” in section 1 of the Immigration Act, 2002 (Act 13 of 2002), issued in terms of paragraph (b) of the proviso to section 11 of the Act by the Director-General, as defined in that Act; or

(CC) is a person who is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control in respect of application for that recognition received on or before 28 February 2021 and approved by the South African Reserve Bank or an authorised dealer in foreign exchange for the delivery of currency on or before 28 February 2022; or

(B) an amount from the vested component, deemed to be paid as a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule, where a member—

(AA) is a person who is not a resident for an uninterrupted period of three years or longer on or after 1 March 2021;

(BB) departed from the Republic at the expiry of a visa obtained for the purposes of—

(AAA) working as contemplated in paragraph (i) of the definition of “visa” in section 1 of the Immigration Act, 2002 (Act 13 of 2002); or

(CC) is a person who is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control in respect of application for that recognition received on or before 28 February 2021 and approved by the South African Reserve Bank or an authorised dealer in foreign exchange for delivery of currency on or before 28 February 2022; or

(ii) paragraph (a), (b) or (d) in respect of any year of assessment, if the Commissioner is satisfied that the rules of the fund provide that not more than one-third of the employee’s retirement interest in the vested component may be commuted for a single payment and that the remainder, calculated together with the employee’s interest in the retirement component, must be paid in the form of an annuity (including a living annuity), a combination of annuities (including a combination of methods of paying the annuity) or a combination of types of annuities except where two-thirds of the employee’s interest in the vested component calculated together with the employee’s interest in the retirement component, does not exceed R165 000, where the employee is deceased or where the employee elects to transfer the retirement interest to a pension preservation fund, provident preservation fund or retirement annuity fund;

[Definition of “pension fund” amended by section 3(i) of Act 90 of 1962, by section 4(1)(c) of Act 90 of 1972, by section 3(1)(c) of Act 101 of 1978, by section 3(1)(c) of Act 104 of 1979 and by section 3(1)(c) of Act 91 of 1982, substituted by section 2(1)(e) of Act 94 of 1983(section 3(1)(p) of Act 25 of 2015 deleted by section 3(1)(a) of Act 2 of 2016) and amended by section 1(1)(a) of Act 2 of 2016(as substituted by section 97(1)(a) of Act 17 of 2017, by section 110(1)(a) of Act 23 of 2018 and by section 75(1) of Act 23 of 2020), by section 1(1)(g) of Act 20 of 2022 and by section 1(1)(f) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]