The Government Employees Pension Fund (GEPF) provided clarifications to its members regarding the reasons for taxing pension payments, specifying that deductions are made in accordance with South African tax legislation.
The state fund stated that the taxation of pension benefits is regulated by the Income Tax Act and rules administered by the South African Revenue Service (SARS).
GEPF emphasized that the amount of tax applied to the pension gain is determined by the nature and value of the benefit, as well as the prevailing tax regulations at the time the payment is received.
Reasons for Taxing GEPF Pension Benefits
The Fund stated in its quarterly bulletin that all pension benefits accumulated after March 1, 1998, are subject to taxation according to South African tax legislation. It also noted that the South African Revenue Service (SARS) taxes various forms of income, including pension benefits, as stipulated in the Income Tax Act 58 of 1962.
Furthermore, the fund added that tax obligations apply to pension benefits regardless of how a member leaves the fund—whether through resignation, retirement, or death. GEPF explained that this reflects the application of tax legislation to pension payments and ensures tax payment in accordance with relevant rules.
The Fund also highlighted that tax obligations apply to all pension benefits, irrespective of the manner of exit (e.g., resignation, retirement, or death), demonstrating the consistent application of tax legislation to pension income. This approach ensures that individuals receiving pension benefits contribute their fair share of taxes, similar to how income from other sources is taxed.
Previously, IOL reported that GEPF clarified why South African pensioners no longer receive Life Certificates. The Fund announced that it stopped sending paper Life Certificates on October 1, 2011, replacing them with an automated verification procedure that cross-references the pensioner's status with the Department of Home Affairs.