Effectively Manage your Pension Fund


One of the benefits of having a successful working life is being able to retire comfortably in your old age. Even though the private sector and South African government have put measures in place to ensure that the working population have pension of provident funds, ultimately it’s also up to individuals to take care of their financial wellbeing.

It’s up to the individual member to take the necessary steps to ensure his or her desired retirement lifestyle is in place.  Individuals who are saving for retirement get to choose between a pension fund and a provident fund. Each option has its own set of advantages and disadvantages, so individuals need to choose wisely to secure their financial future.

In order to effectively manage your pension fund it’s important to work with an experienced or independent financial advisor.

For instance, you need to understand what level of income you require when you retire. You need to assess whether what you have in place is sufficient.

To effectively manage your pension fund you need to keep in mind that the main purpose of having a pension fund is to provide you with benefits when you can no longer provide for yourself financially or to provide benefits for your dependants when you die.

You can preserve your retirement savings, tax-free in a retirement annuity when changing jobs. Your lump sum pay-out is subject to lump sum tax. Upon resignation, the first R25 000 is not taxed, while the balance to R660 000 is taxed at 18%. On retirement however, the first R500 000 is not taxed.

Should you resign and forget to put your claim in, your claim does not expire, so you can always go back to the human resources department with all necessary documentation in order to access your pension fund


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