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Thread: resignation and withdrawal from pension fund

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    resignation and withdrawal from pension fund

    Hope someone here can help,I am 38 and want to resign from my current work,I have been working here for almost 11 years,when I resign will I get all my retirement money minus tax or only one 3rd.and also how much will they tax me.my pension is currently at R400000.

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    Site Caretaker Dave A's Avatar
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    Sounds like there are two issues in play here -
    • withdrawal from the pension fund, and
    • the tax consequences thereof.

    On the withdrawal side, you had better take a close look at the rules of the pension fund. Normally withdrawal from the pension fund will not be automatic upon your resignation from employment with the employer.

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    Email problem Rafael's Avatar
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    The taxation will depend on if you have ever withdrawn from a previous pension and provident fund.

    If you have never withdrawn from a previous pension and provident then your first R25 000 is tax free (before age 55).
    You can withdraw the full amount, as the one third only comes into effect at retirement.

    Please note that whatever you withdraw above your R25 000 tax free amount will be deducted from your tax free lump sum amount at retirement.

    I currently look after 105 Corporate Funds and when a client retires from a fund their biggest regret was eating into their retirement tax free amount.

    I would suggest taking what you need and then transfer the rest into a Preservation fund as it is tax free and if you ever do fall on hard times you can do a once off withdrawal. Your company will give you a withdrawal form where you complete the information for a part withdrawal, part transfer.

    If you do not need the money, then transfer the full amount into a preservation fund.

    I cannot stress the importance of having enough money at retirement.
    You are 38, if you retire at age 65 then you only have +- 324 salary cheque's to save enough for retirement.

    If you need R10 000 a month at retirement (65) until age 80. Then theoretically you asking for R120 000 a year for 15 years without working

    Hope you find the above information useful
    Last edited by Rafael; 23-Apr-14 at 01:07 PM. Reason: adding extra info
    You miss 100% of the chances you never take

  4. Thank given for this post:

    Blurock (24-Apr-14), Dave A (23-Apr-14), KimH (23-Apr-14)

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