The Government Employment Pensions Fund said it only informed their members in September because they needed to ‘test’ the data first. Photographer: Waldo Swiegers/Bloomberg via Getty Images
The Government Employment Pensions Fund (GEPF) gave itself a week to tell 44 000 members about possible higher tax deductions for September that left some pensioners with only half of their usual monthly income.
The South African Revenue Service (Sars) in March implemented a revised pay as you earn (PAYE) tax rate for people earning multiple incomes, which affects the income of the pensioners.
Phumzile Mda, the chief financial officer at the GEPF, said that on 1 and 2 September they communicated the adjusted PAYE tax rate and what members can do to remain at their normal tax rate.
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Mda said that although their members only receive payments at the end of the month, the entity finalises the pensions in the first week of every month. This gave the GEPF less than a week to compile its monthly payments to its 44 000 members.
She said the GEPF sent out a general message to its 450 000 members regarding Sars’ revised tax rates in January.
The fund’s spokesperson, Rakgwatha Mokou, said they communicated the revised tax rate to beneficiaries on email, WhatsApp, SMS and, “where possible, we made use of the post”.
The M&G has been told that other institutions such as Old Mutual contacted their beneficiaries as early as April to introduce them to the new revised tax rate.
Mda said that although the GEPF received data from Sars about which members would be affected in March, they received a revised list of members in July. But they only informed their members at the start of September, because they needed to “test” the data first.
The GEPF did not receive “a lot” of responses from their members, said Mokou, and this was interpreted as “everything is okay with the deductions”.
But multiple messages sent to the Mail & Guardian show that several pensioners had a sharp reduction in their monthly income, without knowing the deductions would take place.
A woman living in a rural area in Mpumalanga has been receiving a widow’s pension since her husband died in 2005. At the end of September, she received R3 000 instead of her usual R6 078 pension.
That amount needs to cover food, water and electricity for a household of four.
The R3000 “won’t last”, she said. “What was the problem? Of all the people, why did they do it to the pensioners? Why?”
She said the GEPF had not contacted her prior to the deduction, and multiple phone calls to the organisation remain unanswered.
Sars and the GEPF held an urgent meeting on Monday.
Matau Molapo, of the GEPF told the M&G that they would contact all affected members by E-mail and SMS.
As of Wednesday, this had not happened.
The revised rate was “not new information”, he added, referring to the initial announcement made by Sars in November last year.
Sars announced enhancements to its IBIR-006 Tax Directive Interface Specification in 2021 that would take effect in March 2022.
The revised tax rate allows for a more accurate PAYE deduction for people receiving multiple incomes. Instead of a monthly tax deduction at a fixed rate, a PAYE tax rate is calculated according to a person’s specific earnings.
But people have the option to continue paying tax monthly according to their total income.
The GEPF said in a statement on Tuesday that the choice of continuing as normal “will result in the GEPF continuing to deduct tax as in previous months and not in the more accurate effective tax rate as provided by Sars.
“This may result in pensioners having to settle a tax debt with Sars at the end of the tax year. Choice forms will be sent to affected pensioners and will also be available at GEPF offices.”
The pensioners who have not yet chosen between the revised tax rate and the fixed rate must do so, said Mda.
The GEPF said once a member indicated the choice of tax rate, the tax paid in September will be taken into account when the next month’s tax rate is compiled.
“We will make sure this communication gets to everybody,” said Mokou.
* Download the GEPF document here, to send your choice of tax rate to the GEPF.
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