Through all the noise we sometimes just need some quiet time to truly reflect on the trepidations on our minds. Pieter Faber discusses the principles underpinning the implementation of the retirement reforms in the 2015 Tax Amendment Acts

Tax proposals are regularly controversial, though usually the indignation and protest are limited to those in the tax profession and big business who wrestle with the complexities of tax policy and law on a daily basis. However, never has tax policy raised the general ire of the public to such an extent as has been with the implementation of the retirement reforms in the 2015 Tax Amendment Acts.

The dust has still not settled, with government initially tip-toeing around the matter, then taking a hard stance by forging ahead, with National Treasury, the Standing Committee on Finance and even the Presidency defending Government’s policy position. However, public objection – mostly from organised labour – remains significant with even the President mentioning the dispute in SONA 2016 and undertaking to re-engage with the concerns raised. This has now been followed by the Minister of Finance issuing a notice of proposals to partly defer the retirement reforms and possibly scrap them in two years’ time. Many people are still recovering (cost and time wise) from the previous time the Minster did this (in 2014) and the ongoing uncertainty and repeated proposal to unscramble the egg does not imbue much confidence. This will again lead to much policy and public confusion as well as wasted cost to employers, software designers, fund managers and ultimately employees themselves. To address this complex matter in the interim the Minister in his 2016 Budget Speech continued with the proposed tax deduction alignment for the next two years but postponed the compelled anuitisation requirements, which were the main objection.

Politics aside, two interesting questions have been raised throughout this discourse which does require some closer scrutiny. The first matter, which seems to be the gist of the concerns raised, has revolved around the question of the extent of government’s legitimate powers to regulate the private affairs of its citizens when it is in the public interest. The second matter has been voiced less ferociously but is something SAICA also raised with parliament in 2015, namely what constitutes proper public consultation in the legislative process? This noise around the retirement reforms does, however, provide us an opportunity to again reflect on these difficult questions of principle.


A constitutional law debate on human rights versus public interest is one too complex to be dealt with in this short narrative but reiterating the applicable principles does assist in giving food for thought for the debate. In seeking to confine the essence of the debate, much reliance is placed in the way the courts have done it and who better to articulately enunciate the principles than the learned judges of our Constitutional Court. Their words, as repeated so often in this narrative, should not be redacted to mere summary too often so as to avoid losing the power and wisdom they hold.

Like all public interest discussions, this one must start with our Constitution1 as supreme law in which the preamble states (my own emphasis):

‘We therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the Republic so as to –

  • Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights;
  • Lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by law;
  • Improve the quality of life of all citizens and free the potential of each person … ’

This obligation of government to look after the public’s general well-being is continued in the Constitution (own emphasis):2

‘All spheres of government and all organs of state within each sphere must –

  • preserve the peace, national unity and the indivisibility of the Republic;
  • secure the well-being of the people of the Republic;
  • provide effective, transparent, accountable and coherent government for the Republic as a whole;
  • be loyal to the Constitution, the Republic and its people …’

Acting in the public interest is therefore directly within the constitutional mandate of Government. This has been Government’s argument all along in this debate, namely that it has an obligation to ensure the financial well-being of the people of South Africa. In the 2004 discussion paper3 released by National Treasury, this clear objective and why it so important is stated as (own emphasis):

‘The organisation and financing of income security in retirement is amongst the most profound expressions of a nation’s cohesion and values.’

The broad objectives included (own emphasis):

‘Government seeks to build on the strengths of the established retirement funding environment, while progressively addressing its deficiencies. The broad objectives of retirement policy can be simply stated. Government seeks to … [e]ncourage individuals to provide adequately for their own retirement and the needs of their dependants …’

Government’s motives therefore seem honourable enough. The question is rather whether there are limits as to how intrusive this obligation can be exercised in achieving this greater good.

The answer seems to be in the affirmative and also seems generally addressed under the right to privacy4 of the people against state interference.


The rights in the Bill of Rights5 are not unfettered rights and are expressly subject to limitation based on a balance of interest.6 The concept and structure of the limitation has been explained as follows:7

‘The introduction of a limitation clause is a hallmark of the modern constitution and represents an attempt to create a structure in which a balance can be achieved between the will of a democratically elected government, on the one hand, and the court’s role in protecting constitutional rights, on the other …’

‘It provides the basis in terms of which an unelected judiciary can examine the government’s proposed limitation of an entrenched right and justify that judiciary’s decision either to permit the erosion or to set the law aside …’

‘When a limitation of a right is analysed, the four foundational values of human dignity, equality, freedom and democracy play a crucial role in determining the purpose of that part of the right which is affected by the limiting provision. In this way, the four values animate each right and are crucial to the determination of its purpose …’

‘When a limitation of a right is analysed, the four foundational values of human dignity, equality, freedom and democracy play a crucial role in determining the purpose of that part of the right which is affected by the limiting provision. In this way, the four values animate each right and are crucial to the determination of its purpose …’

So where do we draw the line on retirement reform?

The historical intricate scope of the right to privacy is captured by the authors of South African Constitutional Law: The Bill of Rights8 (own emphasis):

‘The ambit and scope of the right to privacy has been a vexed question for more than a century. In their seminal article, published in 1890, Warren and Brandeis defined the right to privacy as the right to be left alone. In their article, they examine the source of the right and conclude that the right to be left alone is not to be found in the right to property but, rather, in the right to personality. More recently, Feinberg has elaborated upon this conclusion by sourcing privacy within the concept of autonomy, particularly in the right of a person to decide how to live his or her life and especially how to make critical life decisions.’

So what exactly does this right cover; would it cover my right to choose how to invest my retirement money without intrusion from Government? Very early on in our constitutional democracy, the right to privacy came before our courts for determination. In Bernstein,9 the court lays out as comment the scope of the right to privacy as follows (own emphasis):

The scope of the privacy right was closely related to the concept of identity and was not based on a notion of the unencumbered self but on the notion of what was necessary to have one’s own autonomous identity. No right was absolute. This implied from the outset of interpretation that each right was already limited by every other right accruing to another citizen. In the context of privacy this meant that it was only the inner sanctum of a person, such as his/her family life, sexual preference and home environment which was shielded from erosion by conflicting rights of the community. Privacy was acknowledged in the truly personal realm, but as a person moved into communal relations and activities such as business and social interaction, the scope of personal space shrank accordingly. There was no authority for the notion that the right to privacy extended beyond the private sphere of an individual’s existence. Beyond that the scope of a person’s right to privacy extended only to those aspects in regard to which a legitimate expectation of privacy could be harboured. In each particular situation an assessment had to be made as to whether the public’s interest to be left alone by government had to give way to the government’s interest in intruding on the individual’s privacy in order to advance its goals, notably those of law enforcement.’

These statements raise interesting points of principle. For example, is the right to choose how to invest my retirement money part of the inner sanctum or merely a right to which a legitimate expectation attaches? The former will mostly preclude government to interfere notwithstanding that this right impacts on community interest. For example as analogy, my sexual preference may be risky resulting in detriment to myself and cost to the community which government may have a legitimate objective to curtail. However, Government would still be precluded from shielding me from myself or directing how I make these decisions or even interfering with these decisions.

The court reiterates that the ’inner core’ merely provides a stronger entitlement to protection and does not mean that it is the only place for protection.10

The courts have not only re-emphasised the scope of the right but also the obligation on the State to act positively in creating space to exercise such rights. The court states:11

‘The right to be left alone should be seen not simply as a negative right to occupy a private space free from government intrusion, but as a right to get on with one’s life, express one’s personality and make fundamental decisions about one’s intimate relationships without penalisation. The concept of privacy had to be regarded as suggesting at least some responsibility on the part of the State to promote conditions in which personal self-realisation could take place.’

So does that include that the State creates a positive space for me to choose whether I retire with a lump sum or annuity and not take away all my choices?


Whatever the conclusion is on the above matters as pertains to retirement reforms, it is clear that neither side’s views can merely just be dismissed out of hand. Both viewpoints have merit and it may ultimately be up to an agreement between the politicians and civil society. Maybe ultimately the courts will have to decide where we draw the line between government’s obligation to interfere and civil society’s rights no to have government interference. However, as a country reborn on the foundations of dialogue and consultation and not confrontation, the former may be the preferred solution.


  1. Constitution of the Republic of South Africa Act 108 of 1996.
  2. Section 41, Constitution of the Republic of South Africa Act 108 of 1996.
  3. Retirement Fund Reform: a discussion paper, National Treasury December 2004 at p 4                     (http://www.treasury.gov.za/public%20comments/Retirement%20Fund%20Reform%20A%20Discussion%20Pape     r.pdf).
  4. Section 14, Constitution of the Republic of South Africa Act 108 of 1996.
  5. Chapter 2 of the Constitution of the Republic of South Africa Act 108 of 1996.
  6. Section 36, Constitution of the Republic of South Africa Act 108 of 1996.
  7. M H Cheadle, D M Davis and  N R L Haysom (eds), South African Constitutional Law: The Bill of Rights, 2015 at 1.4.
  8. Cheadle et al, South African Constitutional Law: The Bill of Rights, at 9.2.
  9. Bernstein and Others v Bester NO and Others 1996 (4) BCLR 449 (CC) at 452.
  10. Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others: In re: Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others 2000 (10) BCLR 1079 (CC) at 1087.
  11. National Coalition for Gay and Lesbian Equality and Another v Minister of Justice and Others 1998 (12) BCLR 1517 (CC) at 1522.

AUTHOR l Pieter Faber is Project Director: Tax at SAICA