According to the 2011 Budget Review, 1 March 2012 will see the introduction of a new dispensation for permissible deductions towards retirement funds. There is a clear twofold message behind these changes, particularly when read together with the taxation of lump sum benefits:
– higher income earners will have to make additional provision for retirement outside of tax incentivised retirement funds; and
– retirement fund benefits are intended to provide annuities at retirement and not tax free lump sum benefits on withdrawal and retirement.