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Q: You mentioned this will be a budget passed on constrictive fiscal policy:

A: Yes, this budget is about debt sustainability in a low growth environment. So what the Minister has to show is a decline of levels of spending relative to GDP – and that probably means that real non-interest spending is going to be a constraint and I think although this is the year of the implementation of the National Development Plan we are going to see big numbers being spent on education, health and infrastructure. If you look at the real non-interest spending growth it’s going to be quite low, around 2% for the next three years.

Q: You mentioned carbon tax – can you expand:

A: I don’t think we will see huge changes on the tax front before the introduction of the tax review - Davis Committee – or at least its recommendations, but what is clear is that in a low growth environment the National Treasury would at least look at broadening and strengthening its tax base. I think there is a significant possibility that we will see the introduction of additional environmental taxes, particularly a carbon tax from next year.


David Gluckman, head of Sanlam Employee Benefits future positioning and research on 2014/15 budget:

Key pointer: Six formal papers were released and action followed on retirement reform – so this is very much a year of consolidation and more clarity on some of the details as well as next steps as far as reform is concerned.


Q: What is your view on any further announcements re retirement reform in this year’s budget?

A: In terms of retirement reform, the Minister has already made quite a few announcements in last year’s budget and some of this has already been rolled out during the past year. We’ve seen changes to tax coming from March 2015 and changes to how people can take money from their provident funds. So we expect consolidation, a bit more clarity on some of the details in the next year and maybe some clues to what the next steps are with regard to reform.

Q: You mentioned the role of trustees in educating and communicating to retirement members on retirement savings. Would the budget announcement include any specifics for trustees going forward?

A: it will be interesting to see if the Minster gives any more clues on what they expect of trustees. The last year the Minister indicated possibly calling a national conference of trustees, that didn’t happen but clearly the focus for government has been ensuring that we have the right trustees to run the retirement funds and that they are appropriately trained. And from this month forward there are new laws on the accountability of trustees and whistle blowing. We are just looking for more clues on the same theme and what will happen next year.

Q: What is your view on implementing the National Savings Plan?

A: What the Minister said in last year’s budget is that we’re going to look to introduce a new tax preferred savings vehicle where there wouldn’t be tax deductibility on contributions and all the build up on investments, whether through income or capital growth, will be tax free. So that will be a totally new tax savings vehicle in SA. It has happened in other countries. The indication was April 2015 – we could look to see if that date is sticking or be moved slightly and the detail around the product. Obviously the product providers will then look to structure products to roll out to the market in 2015. This could be good for consumers as there will be a whole slew of new tax preferred saving vehicles that they can choose invest in. It also helps to make the market more competitive – it’s an exciting development.

Q: Not a budget with any surprises when it comes to retirement reforms?

A: Well, if it is unexpected we will find out tomorrow. But I think in terms of reforms it happens over a long period. The government has set the key themes, we have seen quite a bit of action this year and clues to the next direction of reforms, but I doubt we will see a new course being plotted out tomorrow.

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