“Retirement annuity fund” definition of section 1 of ITA

“retirement annuity fund” means any fund (other than a pension fund, provident fund or benefit fund) 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 the Pension Funds Act: Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve any fund in respect of any year of assessment unless he is in respect of that year of assessment satisfied –

(a) that the fund is a permanent fund bona fide established for the sole purpose of providing life annuities for the members of the fund or annuities for the dependants or nominees of deceased members or for the purpose of providing any benefit contemplated in the “savings withdrawal benefit” in section 1; and

[Paragraph (a) substituted by section 2(g) of Act 21 of 1995 and by section 1(1)(zB) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]

(b) that the rules of the fund provide –

(i) for contributions by the members, including contributions made by way of transfer of members’ interests in approved pension funds, pension preservation funds, provident funds, provident preservation funds or other retirement annuity funds;

(ii) that not more than one-third of the member’s interest in the vested component may be commuted for a single payment, and that the remainder, calculated together with the total value of the member’s share standing to the credit of 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 total value of the member’s interest in the vested component plus the member’s interest in the retirement component does not exceed R165 000, or where the member is deceased or where the member elects to transfer the vested component to 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 a provident preservation fund and who was 55 years of age or older on 1 March 2021-

(i) 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;

(ii) 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 prior to, on and after 1 March 2021; and

(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii);

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

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

(ii) 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

(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii),

reduced proportionally by an 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 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 (ii) substituted by section 4(1)(e) of Act 90 of 1972, amended by section 3(1)(d) of Act 91 of 1982, substituted by section 2(1)(d) of Act 101 of 1990, amended by section 2(1)(k) of Act 113 of 1993 and by section 2(2)(b) of Act 8 of 2007, substituted by section 3(1)(g) of Act 8 of 2007, by section 2(1)(x) of Act 3 of 2008, by section 4(1)(x) of Act 60 of 2008(section 4(1)(zZc) of Act 31 of 2013 deleted by section 143(1)(a) of Act 25 of 2015), by section 3(1)(zB) of Act 25 of 2015(section 3(1)(zC) of Act 25 of 2015, deleted by section 3(1)(a) of Act 2 of 2016) and by section 1(1)(e) 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 which erroneously omits the words preceding item (a) of subparagraph (ii)) and amended by section 4(1)(l) and (m) of Act 20 of 2021 and by section 1(1)(zC) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]

(iii) ……….

(iv) ……….

(v) that no member shall become entitled to the payment of any annuity or lump sum benefit contemplated in paragraph 2(1)(a) of the Second Schedule prior to reaching normal retirement age;

(vi) ……….

(vii) ……….

(viii) ……….

(ix) ……….

(x) that a member who discontinues his or her contributions prior to his or her retirement date shall be entitled to –

(aa) an annuity or a lump sum benefit contemplated in paragraph 2(1)(a) of the Second Schedule payable on that date;

(bb) be reinstated as a full member under conditions prescribed in the rules of the fund;

(cc) the payment of a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where that member’s interest in the fund is less than an amount determined by the Minister by notice in the Gazette; or

(dd) the payment of-

(A) a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where that member-

(AA) 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 applications 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;

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

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

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

(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 para-graph (b) of the proviso to section 11 of the Act by the Director-General, as defined in section 1 of that Act;

(B) an amount from the retirement component and 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 para-graph (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 applications 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

(C) 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

[Subparagraph (x) substituted by section 3(1)(p) of Act 20 of 2006, by section 2(1)(zB) of Act 3 of 2008 and by section 7(1)(zB) of Act 17 of 2009]

[Item (dd) substituted by section 3(1)(zD) of Act 25 of 2015, by section 5(1)(i) of Act 15 of 2016, amended by section 2(1)(p) and (q) of Act 23 of 2020 and be substituted by section 1(1)(zD) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]

(xi) that upon the winding up of the fund a member’s withdrawal interest therein must-

(aa) where the member received an annuity from the fund on the date upon which the fund is wound up, be used to purchase an annuity (including a living annuity) from any other fund; or

(bb) in any other case, be paid for the member’s benefit into any other retirement annuity fund;

(xii) that save-

(aa) as is contemplated in subparagraph (ii);

(bb) for the transfer of any member’s interest in any approved retirement annuity fund into another approved retirement annuity fund: Provided that the value of each individual contract being transferred must exceed R371 250: Provided further that-

(a) in the case where the total member’s interest in any approved retirement annuity fund is not transferred into another approved retirement annuity fund, the value of the member’s remaining interest after the transfer must exceed R371 250; and

(b) the provisions of the first proviso and paragraph (a) of the further proviso shall not apply in the case where the member’s total interest in any approved retirement annuity fund is transferred into another approved retirement annuity fund;

[Item (bb) substituted by section 5(1)(r) of Act 35 of 2007, by section 1(1)(l) of Act 20 of 2022 and by section 1(1)(m) of Act 17 of 2023 effective on 1 March, 2023 and applicable in respect of years of assessment commencing on or after that date]

(cc) for the benefit contemplated in subparagraph (x)(cc);

(dd) as is contemplated in Part V of the Policyholder Protection Rules promulgated in terms of section 62 of the Long-term Insurance Act; or

(ee) for any deduction contemplated in paragraph 2(1)(b) of the Second Schedule,

no member’s rights to benefits shall be capable of surrender, commutation or assignment or of being pledged as security for any loan;

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

Provided further that the Commissioner may approve a fund in respect of any year of assessment, if the Commissioner is satisfied that the rules of the fund provide for the creation of the “savings component”, “retirement component” and “vested component” as defined in section 1;

[Definition of “retirement annuity fund” amended by section 2(1)(e) of Act 65 of 1986, by section 4(1)(zZb) of Act 31 of 2013 and by section 1(1)(zE) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]