Grey-listing – What does it mean for South Africa?
Over the past few months, we have received numerous enquiries about South Africa’s Grey- listing. We hope to provide some insight into what grey-listings and how South Africa came to be grey-listed! The Financial Action Task Force (The Task Force) is a global organisation based in France that promotes policies and sets international standards relating to the combating of money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction. Those countries that do not comply with the Task Force standards are placed on its ‘grey-list.’
In 2019, The Task Force conducted a review of South Africa and issued a report in October 2021. The Task Force determined that South African had too many weaknesses in its legal framework.
South Africa was placed under a one-year observation period in October 2021, giving the country time to address 67 Recommended Actions.
In short, the Task Force determined it is essential for South Africa to improve its efforts to pursue money laundering and terrorist financing transgressions, detect, and seize illicit cash flows and improve the availability of beneficial ownership information. South Africa was given until 22nd October 2022 to rectify the deficiencies, but they failed to do so, resulting in South Africa being grey-listed on 24th February 2023. Grey listing means that South Africa needs to greatly enhance its monitoring of serious financial crimes and terrorist financing. The most significant implication for South Africa is the reputational damage to the country, as its effectiveness in combatting financial crimes like corruption and money-laundering as well as terror financing are deemed to be below international standards. The compliance and risk management company, Moonstone, has produced an video, “Greylisting: what’s at stake for South Africa.”
Click the link below to watch this 14-minute video, which we encourage you to watch. It is extremely informative and will provide a clear understanding of what is at stake!
Moonstone – Greylisting, what’s at stake for South Africa
Retirement Annuities
A retirement annuity (RA) is an investment product that allows the investor to contribute lump-sum or regular monthly amounts into an investment to provide the investor with an income in retirement. The benefits of investing in an RA are that contributions are tax deductible but limited to 27.5% of the greater of remuneration or taxable income capped at an annual limit of R350,000. No interest or dividend withholding tax is payable within an RA.
Funds in an RA may not be accessed before the investor turns 55 years old. Upon retiring from the Fund investors have the following options available:
- Purchase a compulsory annuity with the entire benefit to provide a regular income in retirement.
- A maximum of 1/3rd of the benefit may be taken as a cash benefit and the remaining 2/3rds of the benefit must be used to purchase an annuity to provide the investor with an income in retirement.
- If the benefit is less than R247, 500 the entire benefit can be accessed as a cash benefit.
When an investor retires, he or she is taxed according to the retirement tax tables:
(The tax tables were amended for the lump sums accruing from 1st March 2023 and 28th February 2024.)
| 0 – R550, 000 | Tax free |
| R550, 001 – R770, 000 | 18% of the amount over R550, 000 |
| R770, 001 – R1, 155, 000 | R39, 600 + 27% of the amount over R770, 000 |
| R1, 1550, 001 + | R143, 500 + 36% of the amount over R1, 150, 000 |
Henry Cloud, the New York Times and Wall St. Journal bestselling author whose books have sold nearly 20 million copies made the following quote:
“Our kids aren’t an annuity for our retirement, social system or medical frailty.”
Make sure you start saving for retirement in a retirement annuity today!
