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Johannesburg - The National Treasury says pensioners could get more when they retire if retirement income charges are reduced.

David McCarthy, the National Treasury retirement specialist, said that the Government hoped that the latest discussion paper on retirement fund income charges will improve

household savings and reform the retirement
industry.

He said this when the National Treasury released its final discussion
paper in a series of five discussion papers at the Holiday Inn Hotel in
Rosebank on Thursday.

Releasing the discussion paper - titled "changes in South African
Retirement Schemes" - McCarthy told journalists that charges imposed on
pension fund members were very high.

He said that the retirement fund industry needed to first accept that this
was a problem in order to make a constructive input.

"Charges significantly reduce benefits to members, and could reduce
retirement income by more than 50%.

"If you can reduce your recurring charges from 3.5% per annum to half a %
per annum, either you can get twice as much when you retire or you can get
the same benefit with contributions which around half as large.

"And very few people understand the large impact that small recurring
charges have on the size of your benefit for people who are saving for a
very very long time," McCarthy said.

Prior to the release of this discussion document, the National Treasury
published four other technical discussion papers titled "Enabling a better
income in retirement income"; "Preservation, portability and uniform
access to retirement income" (both in September 2012); and in October 2012
- "Incentivising non-retirement savings" and "Improving tax incentives for
retirement savings".

Last Friday, the National Treasury published the "2013 draft Taxation Laws
Amendment Bill" for public comment, which began to legislate some of these
reforms.

The latest discussion paper deals with charges that are imposed on members
during accumulation phase, or before retirement.

The release of the latest paper follows Finance Minister Pravin Gordhan's
meeting with the chief executive officers of service providers in the
retirement fund industry in June where he explained the 2012 and 2013
Budget Retirement Reform proposals.

The National Treasury said that the primary objective of these proposals
for both the industry and the Government is to ensure that the savings and
investment industry serves the interest of customers, in line with the
principles of the Treat Customers Fairly (TCF) initiative.

McCarthy said the charges matter was not only a South African concern, but
a subject of international debate.

He said while the reforms could impact on the profits of various service
providers, the National Treasury hoped that the retirement fund industry
would give constructive input to the discussion papers which would result
in a "win-win solution".

McCarthy also said some of the draft proposals would be to empower the
pension funds regulator, who takes office on 1 August, to monitor costs
and to benchmark charges on retirement income to be in-line with
international standards.

Govt to assist SA household in savings

Meanwhile, Ismail Momoniat, the deputy director-general of tax and
financial sector policy, said household savings in South Africa revolved
around the 0% line, which is why the Government saw a need to produce the
five discussion papers not only to improve their savings, but to also help
them get into the culture of saving.

There will be a formal public consultation process on the draft proposals
in the latest paper, which closes on 30 September 2013.

The National Treasury said after the consultation process, firmer policy
proposals will be developed, leading to a draft legislation, which is
expected to reach Parliament in late 2014. - SAnews.gov.za