Provident funds

[Hugo2]

Hugo,

Nearly 3 years between yours and the post before yours. Must be a well considered reply.

//joking

No jokes buddy - as elsewhere on the forums there were links to this page and instead of finding the links i posted the updates, this way i thought that everyone following the Dec & Jan links will see the updated info.

So no joke, I took the easiest laziest route and should perhaps have traced all the links - but that was far too much effort!

[Janneman_Kie]

Hi,

This is a bit of sad news. To lose so much of your pension to tax - dammit. So it makes no difference if you pay out now or later. Only the risk or rates might be worse later.

Just a question. If I resign and transfer my funds to an Alan Gray type high yield fund for two or three years. Won't it grow a bit more here in the "emerging economy" (hoping for a bit of a boom in the local JSE) than in Aus ? Then take the tax cut and move it. Or as Bob says - put it in a fund in Aus that grows 10% anually and the Rand might slide against the Aus $.

So many options ...

Janneman

[Hugo2]

Hi,

This is a bit of sad news. To lose so much of your pension to tax - dammit. So it makes no difference if you pay out now or later. Only the risk or rates might be worse later.

Just a question. If I resign and transfer my funds to an Alan Gray type high yield fund for two or three years. Won't it grow a bit more here in the "emerging economy" (hoping for a bit of a boom in the local JSE) than in Aus ? Then take the tax cut and move it. Or as Bob says - put it in a fund in Aus that grows 10% anually and the Rand might slide against the Aus $.

So many options ...

Janneman

Hi, sorry but I have no investment knowledge - perhaps ask them if you can do this AG high Yiled within a wrapper / umbrella or preservation fund as to delay tax liabitily or did you intend tom maximise after tax growth. If you intended latter remember you are now ATO wold wide tax resident and now ATO is going to grab their tax.

Greetings

Hugo

[Toitjie]

I have a question, if anyone has some info I would appreciate it

Im not a boffin on these things, but I am in a provident fund, or actually gratification fund (dont know whether they are the same) but the principle is I get all my money after tax when I resign, not only a third as with pension funds

Some time back we discussed this rumour and it seems there are now even more rumours - that the govt want to "nationalise" these funds, meaning taking your money, redistributing it and basically you dont get your lumpsum

Is there any truth to this, and will it affect past payments to this fund, or only paymens after this "decision" (if it happens") comes into effect

thanx

[IamInACT]

I have taken the money from my provident fund and preservation fund!

[JDJoburg]

Just a rumour really - no-ones's taking your lump sum (yet!) In fact, they've just recently adjusted the tax rates so that most people will pay less when withdrawing from their funds. As part of a general retirement reform program, the government is looking at instituting a national retirement scheme at some time in the future, and one of the ideas that was put forward included preventing people from withdrawing and spending their retirement money prior to retirement, which is not necessarily a bad idea although it would probably meet with too much public resistance to ever become a reality. What is more likely, is that South Africans will be forced (like Australians) to contribute to either a private or government scheme.

In any case, these issues are still in their infancy and there will be a lot of discussion and consultation with the public and the retirement fund industry, followed by legislative processes which take a fair amount of time. So, to put your mind at ease, you will have ample warning if any fundamental changes are being planned, and these changes are likely to be fairly conservative if they do come about - there are certainly no plans afoot to confiscate and redistribute people's retirement savings. In the mean time, retirement funds still offer very attractive tax benefits (just stay away from the inflexible, high-cost ones), so don't let rumours put you off.

By the way, when you resign, you can take your entire retirement fund proceeds as a lump sum, whether it's a provident fund or a pension fund makes no difference. The difference is only at retirement, where you're limited to taking one third of a pension fund but can take the full value of a provident fund as a lump sum.

I have a question, if anyone has some info I would appreciate it

Im not a boffin on these things, but I am in a provident fund, or actually gratification fund (dont know whether they are the same) but the principle is I get all my money after tax when I resign, not only a third as with pension funds

Some time back we discussed this rumour and it seems there are now even more rumours - that the govt want to "nationalise" these funds, meaning taking your money, redistributing it and basically you dont get your lumpsum

Is there any truth to this, and will it affect past payments to this fund, or only paymens after this "decision" (if it happens") comes into effect

thanx

Edited February 1, 2010 by JDJoburg

[Toitjie]

Thanx JD, as always, your assistance is greatly appreciated!

One less thing for me to worry about!!

y

[Kit]

Interesting thread... I've got a pension+provident fund too and have been pondering what to do with them when we emigrate. It seems the best is for me to take both as a lump sum. If I want to do that, do I have to officially/legally 'emigrate'?

And I can't believe it was R2.00-ish to the Aus$ in 1994... wasn't the GBP something like R3?

[IamInACT]

If I want to do that, do I have to officially/legally 'emigrate'?

For any Pension or RA, yes, you have to formally emigrate with SARS.

For any Provident fund, no, you can takeout if with you now. (less tax of course)

[Diveup]

Hi,

I have a preservation fund in South Africa. I have withdrawn once already. Is their anyway I can get the remaining money out.

Diveup

[Stepchook]

For any Pension or RA, yes, you have to formally emigrate with SARS.

For any Provident fund, no, you can takeout if with you now. (less tax of course)

Not true. You can also take cash in your Pension fund and pay the applicable tax. You can then take R750k per adult per calendar year as a travel allowance, without needing tax clearance.

[IamInACT]

Not true. You can also take cash in your Pension fund and pay the applicable tax. You can then take R750k per adult per calendar year as a travel allowance, without needing tax clearance.

okay, thanks, this was not my understanding, did you do it?

[donalene]

http://www.moneywebtax.co.za/moneywebtax/v...6&sn=Detail

How much tax do I pay on my provident fund withdrawal benefit?

[penny]

Can any one help me with this question

If one is over the 55 year old age is it possible still to get the full amount out of South Africa on emigration.

Penny

[JDJoburg]

Hi,

I have a preservation fund in South Africa. I have withdrawn once already. Is their anyway I can get the remaining money out.

Diveup

Unfortunately, no. You'll only be able to get the balance at retirement age (one third in lump sum and rest as an income, or all of it as a lump sum if it is a provident preservation fund.)

Edited May 10, 2010 by JDJoburg

[JDJoburg]

okay, thanks, this was not my understanding, did you do it?

You can withdraw the full balance of your pension OR provident fund upon your resignation from your employer. Once that is done, it forms part of your regular cash resources that you can take out subject to the usual exchange control limitations. It's only Retirement Annuity funds that require formal emigration in order to withdraw before retirement.

[JDJoburg]

Can any one help me with this question

If one is over the 55 year old age is it possible still to get the full amount out of South Africa on emigration.

Penny

1. If you're referring to retirement annuities (RA's), the answer is (mostly) "Yes" - most RA funds will allow you to make an emigration withdrawal after the age of 55, if you haven't yet retired from the fund. "Retired" meaning that you've started receiving an income already.

2. If you're talking about a pension or provident fund, you should be able to get the full amount as a "withdrawal" benefit, if you are still working for the particular employer and resign, unless the rules of the fund stipulates a mandatory retirement at a particular age. So you'll have to contact the fund's administrators to be sure, but if you are still in full time employment with the particular employer, chances are that you'll be able to resign and have the full amount paid out to you as a "withdrawal" benefit. Some fund may not allow a withdrawal after a certain age.

[penny]

Thank you. We have both RA's and pension/provident funds. Don't know what we would all do without your knowledge

Penny