Why are pension payouts taxed? GEPF clarifies the rules

The Government Employees Pension Fund (GEPF) has explained to its members why pension payouts are taxed

The Government Employees Pension Fund (GEPF) has explained to its members why pension payouts are taxed, saying the deductions are made in line with South African tax laws.

The government-owned fund said the taxation of pension benefits is governed by the Income Tax Act and the rules administered by the South African Revenue Service (SARS).

GEPF said members should understand that the tax applied to a pension payout is determined by the nature and value of the benefit, as well as the applicable tax rules at the time the benefit is paid.

"All pension benefits accumulated after 1 March 1998 are taxable in accordance with the South African tax regulations. The South African Revenue Service (SARS) imposes taxes on various forms of income, including pension benefits, as outlined in the Income Tax Act 58 of 1962," the fund said in its quarterly newsletter.