Tag Archive for: Banking

1 March 2021 marks a watershed for retirement funds in South Africa, says Jean du Toit, attorney and head of tax technical at Tax Consulting South Africa.

Most are focused on the annuitisation rules that have been pending since 1 March 2015, otherwise known as ‘T-day’.

While these reforms are significant, retirement fund members need to understand them in the grand scheme of things.

T-day reforms

Back in 2013, the then minister of finance, Pravin Gordhan, tabled proposals directed at the governance, preservation, annuitisation and harmonisation of retirement funds.

Initially, T-day was earmarked for 1 March 2015, but was postponed as a result of ongoing “consultations” with stakeholders.

Many will be aware that from 1 March 2021, members of retirement funds will be subject to the annuitisation rules, which means that they will only be able to withdraw one-third of the value of their retirement fund by way of a lump sum, where the balance must be withdrawn as an annuity.

The annuitisation rules do not apply where the retirement interest does not exceed R247,500, or to amounts contributed on or after 1 March 2021.

Withdrawal on emigration

Currently, members of retirement funds can immediately access their funds in a preservation or retirement annuity fund when they emigrate from South Africa, if such emigration is recognised by the SARB.

In terms of the latest Taxation Laws Amendment Bill, from 1 March 2021, withdrawal will only be permitted if the member can prove they have been non-resident for tax purposes for an uninterrupted period of three years.

This means an effective three-year lock-in of retirement funds from the effective date.

Importantly, for those who plan on leaving in the near future, in terms of National Treasury’s response to public comments on the amendment, members will be allowed to withdraw their funds under the current dispensation if they file a complete application before 1 March 2021.

Prescribed assets

The ongoing whispers of “prescribed assets”, where the government effectively wants to unlock retirement funding for investment in government projects have made South Africans very anxious. The government’s main hurdle in implementing this policy is Regulation 28 under the Pension Funds Act No. 24 of 1956.

Regulation 28 would have to be amended to effect this policy, as it requires a fund to act in the best interest of its members.

The ANC’s stance on this has not been consistent, but the latest hereon can be drawn from the Medium Term Budget Policy Statement where the minister of finance said that “government has initiated a process to review Regulation 28 to make it easier for retirement funds to increase investment in infrastructure – should their board of trustees opt to do so.”

He further noted that a draft gazette will be published in due course for public comment, so it seems that this policy will be implemented in some shape or form.

Rules that remain unchanged (for now)

It is important to understand that the annuitisation rules are largely directed at aligning retirement funds with respect to annuitisation; but this should not be conflated with the idea of compulsory preservation.

For example, currently, you are permitted to take your full withdrawal benefits from your pension fund in cash upon termination of your employment. Some may understand the new rules to mean that this would no longer be possible, but this is not the case – this rule remains intact – for now.

More changes coming

Further to his comments on Regulation 28, the minister of finance also said that “Government will present legislation next year to allow for limited pre-retirement withdrawals under certain circumstances linked to mandatory preservation requirements.”

National Treasury mentioned this policy will allow access to retirement funds during times of crisis, but mandatory preservation, which was part of the agenda initially, looks like it will be part of the equation.

While changes are implemented progressively, fund members should keep their ears to the ground, as the government’s policy on retirement funds appears to be a moving target.


For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

The South African Reserve Bank’s Prudential Authority has published its annual report for 2019/20, showing how the country’s five biggest banks continue to dominate the sector, despite an increase in competition.

According to the SARB, South Africa’s banking sector is dominated by the five largest banks, which collectively held 89.4% of the total banking sector assets as at 31 March 2020 (March 2019: 90.5%).

Local branches of international banks accounted for 7.0% of banking sector assets at the end of March 2020 (March 2019: 5.8%) while other banks represented 3.6% at the end of March 2020 (March 2019: 3.7%).

Total banking sector assets grew by 16.36% year on year, to R6.6 trillion at the end of March 2020 (March 2019: R5.7 trillion).

This was spurred by an increase in gross loans and advances, derivative financial instruments, and investment and trading securities (mainly government securities and other dated securities), the bank said.

The five largest banks in South Africa based on total assets are:

  • Standard Bank
  • FirstRand
  • Absa
  • Nedbank
  • Investec

These banks face competition from smaller players, including Capitec, African Bank, and more recently Discovery Bank, and TymeBank.

The graph below shows the biggest banks by assets, to December 2019.

“The banking sector remained profitable during the period under review, despite a decline in the profitability ratios,” it said. However, it noted that the impact from the Covid-19 outbreak would have a major impact on the data for the 2020/21 period.

Covid-19 impact

“The spread of the coronavirus disease 2019 (Covid-19) across the world has had a major impact on economies and financial systems,” said Reserve Bank governor and PA chairman, Lesetja Kganyago.

“South Africa, like many other countries, responded to the crisis by putting in place various fiscal, monetary and regulatory support measures. A number of prudential policy interventions were issued by the PA covering banks and insurers.

“The relief measures for banks included a reduction in the minimum liquidity and capital requirements. The guidance notes covered accounting issues and the payment of dividends and bonuses by banks.”

The authority said that the depth and duration of the economic downturn from the Covid-19 crisis remains uncertain at this stage.

“This pandemic, accompanied by a slowdown in economic activity, is expected to weaken banks’ risk profiles or risk-weighted assets and reduce bank profitability, which would negatively affect the ability of banks to meet their minimum capital requirements.

“Financial market volatility, together with the reaction of other financial institutions, has also placed pressure on market liquidity and the supply of term funding,” it said.

South Africa’s response has included:

  • A reduction in interest rates;
  • An injection of liquidity into financial markets;
  • Significant regulatory relief for banks; and
  • Several fiscal and tax measures were announced, supporting households and firms.

“Despite significant turbulence in financial markets, these measures have helped stabilise markets, enabling banks to continue to operate by extending credit to support their customers,” the group said, adding that the government-guaranteed loan scheme for small businesses will complement the measures already taken by banks to support their customers during these trying times.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Euromoney recognises Ecobank’s focus on sustainability and partnerships and its core capabilities in delivering positive social and environmental outcomes across Africa.

The leading pan-African banking group, Ecobank, has won the coveted prize of Africa’s Best Bank for Corporate Responsibility in the Euromoney Awards for Excellence 2020. Euromoney recognises Ecobank’s focus on sustainability and partnerships and its core capabilities in delivering positive social and environmental outcomes across Africa.

Carl Manlan, Chief Operating Officer of the Ecobank Foundation said: “At Ecobank we leverage human capabilities and other core resources to partner for African transformation. We are passionate about co-designing partnerships to drive change at community levels across our pan-African footprint. The Euromoney Award for Excellence recognises our collaboration with African communities and like-minded partners.”

The Ecobank Foundation is doing amazing work in delivering on its commitment to improve the quality of life of people across the African continent. The Foundation should be rightly proud of its ceaseless impact and the real difference that it is making in numerous parts of the continent. Through the Foundation, our Group leverages its resources and capabilities to contribute to the economic and social development of Africa.

Ade Ayeyemi, CEO of Ecobank Group

Ecobank’s Corporate Responsibility primarily concentrates on the three key areas of health, education and financial inclusion. Recent partnership examples:

  • Ecobank’s three-year campaign to raise awareness of Non-Communicable Diseases (NCDs) and educate communities by providing key information about the dietary and lifestyle changes required to help prevent NCDs such as cancer and diabetes. Ecobank Day is our volunteer community day targeted at helping the vulnerable sectors in our local communities.
  • Ecobank’s Group Chairman Sustainability Award which emphasises our role in each country in designing innovative, replicable and scalable solutions driving sustainable environmental and social change. Ecobank Togo is the 2020 winner for its support for Government efforts to provide electricity to 300,000 rural households and businesses through solar energy kits.
  • African economies’ health recovery is vital and Ecobank contributed about US$3 million in the form of cash, healthcare equipment and medical supplies. Moreover, Ecobank deployed its financial capabilities for the African Union’s Centre for Disease Control and Prevention to enable every citizen and member of the diaspora to contribute to the pan-African Covid-19 response.
  • Earlier this month, Ecobank rolled out its ‘Zero Malaria Business Leadership initiative.’ Launched in partnership with Speak Up Africa, it aims to eliminate malaria across Africa through private sector led initiatives which increase financing and take stronger and better-targeted actions to support national malaria control programmes. 

South African corporation Standard Bank won the award for Africa’s Best Investment Bank 2020.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].