Preservation fund: Another option is to transfer your retirement fund benefits into a preservation fund which is effectively a holding bay for your money until you are ready to start drawing down from your investment but, again, there are a few factors that should be noted before proceeding.Note you will continue to be charged investment management fees and administration costs – although as part of a group retirement fund, it is likely that you will benefit from favourable institutional fees. Further, your funds may need to remain in their current investment strategy or alternative funds which the pension fund provider makes available. Firstly, if you elect to defer your benefits, keep in mind that you will not be able to make any additional contributions towards the fund and your group risk cover will fall away. Deferred benefit: You can leave your money in your employer’s fund as a deferred benefit until you are ready to start drawing from your investment, although there are a number of factors to be cognizant of.Generally speaking, you have the following options available to you: If you are a member of your employer’s retirement fund, you are no longer compelled to retire from the fund when you retire from employment.
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If you are invested in a retirement annuity (RA), the earliest age of retirement is age 55, following which you are free to retire at any stage depending on your circumstances. Here we unpack your options should you (i) choose to delay retirement or (ii) elect to retire from your fund. As mentioned above, formal retirement from your employment does not mean that you have to retire from the fund. Whether you choose to stop working will depend on a number of factors such as whether you are sufficiently invested for retirement, your health, and your objectives for retirement, amongst other things.Īnother important decision you need to make is when to retire from your fund. If you are self-employed or your employer has no formal retirement age, you will naturally have the option to continue working and generating an income for as long as you like or are able to. However, formal retirement from the company does not necessarily mean that you need to retire from your pension fund, and it is important that you understand the options available to you (see below).įurther, your employer may wish to retain your services in the form of part-time employment or contract work which means that, while you may need to formally retire from the company, you could be in a position to continue generating an income. Where the employer sponsors a retirement fund, such as a pension fund, the formal retirement age of the fund is usually synchronised with the company’s retirement age for the sake of expedience. While there is no legislated retirement age in South Africa, keep in mind that many employers have a pre-determined retirement age at which point employees are required to retire from the company. Here we explore the most common decisions retirees are faced with together with some factors to consider in the decision-making process. These decisions can be multi-faceted and far-reaching – and getting them right the first time is essential. Saving for retirement generally takes decades to achieve and invariably culminates in a point at which you are required to make a number of critical decisions in a relatively short space of time.