RetirementFind out what all the signposts mean
on your way to the perfect retirement plan.

To preserve or not preserve

Choosing what to do with your retirement benefit is a bit like deciding how to get your fresh produce.

An important question to consider

When you have access to your retirement benefit, should you take the money, or put it into another fund?

Tax considerations

There are tax implications to taking the cash and keeping it invested.

Why you are here

Resigned, retrenched, dismissed - whatever the reason, here you are with access to your savings in your retirement fund. Time to make a tough choice, so get the facts first.

Taking the cash

There's no nice way to say this. If you take your retirement benefit in cash, you start losing right away. There is no more growth or compound interest. And the money might not last as long as you do.

Tax considerations

Have a look at how much you'll have pay. Does withdrawing your full benefit still look like a good idea?

Resigned

Based on how much you take this is the tax you will pay when you resign or are dismissed.

R0 - R25 000: 0%

R25 001 - R660 000: 18% of the taxable income above R25 000.

R660 001 - R990 000: 27%.
R114 300 plus 27% of the taxable income above R660 000.

R990 001 and above: 36%.
R203 400 plus 36% of the taxable income above R990 000.

You can take a lump sum or up to one third at retirement. With a provident fund you may even take the full amount.

Retrenched

Based on how much you take, this is the tax you will pay if you are retrenched.

R0 - R500 000: 0%

R500 001 - R700 000: 18% of the taxable income above R500 000.

R700 001 - R1 050 000: 27%.
R36 000 plus 27% of the taxable income above R700 000.

R1 050 000 and above: 36%.
R130 500 plus 36% of the taxable income above R1 050 000.

You can take a lump sum or up to one third at retirement. With a provident fund you may even take the full amount.

Reinvesting your benefit

Growing your own is better. So reinvest in something like a preservation fund, a retirement annuity or your new employer's retirement fund - which is either a provident or pension fund.

In a nutshell

Comparison between the options to preserve your retirement savings.


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