LETTER: Tax deduction for retirement savings needs urgent attention

In this week of the national budget, I would like to bring to the attention of readers and investment industry participants the oh-so-stealthy problem of tax bracket creep. I am not talking about the obvious creep in income tax brackets that everybody knows about — even the SA Revenue Service acknowledges that the adjustment for inflation has only been partial.

The tax deduction for retirement savings is limited to a maximum of 27.5% of taxable income or R350,000. The R350,000 upper limit was no problem in 2016 but has not been adjusted for inflation since, and is a problem now. More than 10% of the members of the retirement fund that I serve as chair is hitting this upper limit and ends up either paying too much tax or, in response to having to pay more tax, not saving enough. 

I call on the SA investment industry to urgently take this up with the government. Without savings, their industry is going nowhere. Without savings, where is the money for infrastructure investment going to come from? 

Prof Phillip de Jager, Chair, UCT Retirement Fund

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