Pension Fund Withdrawal

[supersunbird]

While saturnz parking bay idea might work in CT, he doesn't even bother to ask your location,a parking bay in Poffadder might be of no investment use, neither does he explore the tax implications of withdrawal and if it will ever recover from that impact.



I wouldn't even take the tax free R25 000 out (you can only do it once in lifetime), I'd keep it for if really needed.

You don't have to put it into a RA, you could also put in in a Pension Preservation Fund, where you can access a sum once off, if life circumstances really require it. It's like a RA otherwise but no additional contributions allowed and the once of withdrawal being allowed.

And you can invest in a pretty high risk portfolio in a RA or preservations fund, 50% SA equity, 25% foreign Equity and 17.5% local property and the remaining 7.5% bond fund.

 

[SauRoNZA]

Hi all sorry to bring this up again. I am currently in the same situation as i am now changing jobs and need to make a decision as to what do i do with my pension.

One option was to open a RA and transfer it there.

The 2nd was to use it to pay of my bond(part of the bond)

3rd was to withdraw the cash and invest it in a high risk unit trust. Preferably high equities.

I was just wondering whats your opinion on option 3. This funds will be saved for a period of over 30 years. Will ot not grow in proportion to the RA?. I know there are different tax implementations when withdrawing this funds after 30 years however the difference is that you will be able to see and utilize both the capital and interest portion of the money whereas with pension or the RA you will not see or have access to all your hard earned money?

Your thoughts??

Kind of the point of locking it out till 55 is to protect you from yourself because the option to have access to it is the real danger vs time in the market.

I would throw it all in 10x who starts you at a more aggressive fund and tapers it down as you get closer to retirement and I’m not convinced even the most aggressive unit trust would match it unless you are very very lucky.

Remember it’s going into a unit trust type setup regardless.

That being said I’m not sure you can dump a Pension Fund into an RA with further contributions. Unless you don’t transfer it and draw it out as cash in which case you pay tax on it so that wouldn’t be clever.

The loss of drawing it out as cash to put into unit trusts will probably also negate any better performance.

Your option is more than likely to move it into a Preservation Fund. Much the same really but you can’t add more contributions to it and depending on when it was started slightly different tax setup.

 

[SauRoNZA]

I wouldn't even take the tax free R25 000 out (you can only do it once in lifetime), I'd keep it for if really needed.

Always wondered (as I had no intention of doing it) whether this applies per fund or as a whole on retirement savings?