Increased tax on the interest and other income of South African pension funds has contributed to a massive fall in the funds' net cash flow.
The increased tax contributed to a 36.9% fall from R25,183bn to R15,893bn in pension funds’ net cash flow from 1998 to 1999.
This is revealed in the South African Registrar of Pension Funds’ 1999 41st annual report. The Registrar also attributed the cash flow slump to a decrease in the total investment income (including contributions, investment income and transfers received ) by 19.5%.
The total contributions from members increased from R12,769m in 1998 to R13,601m in 1999. Employers’ contributions decreased from R41,545m in 1998 to R34,529m in 1999.
The report says the figure for the total number of fund members does not indicate the actual number of individual members, because some individuals contributed to more than one fund. A decline in number of members is attributed to the fact that some employers had merged their companies’ provident and pension funds.
Income tax on funds has increased from 19% to 25%, over the same period.
By Janet Du Chenne
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