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Pricey Reader,
Thanks to your legitimate query. Your query has numerous completely different segments, and I’ll cope with them hereunder. Please don’t see this as recommendation however as common info. My recommendation to you’ll be to see a Licensed Monetary Planning skilled to analyse your state of affairs and current you with a tailormade answer to your particular state of affairs. The choices you make now will have an effect on the remainder of your life.
Your pension fund
If in case you have been a member of the GEPF for lower than 10 years, you can be entitled to solely a gratuity. If in case you have been a member of the GEPF for greater than 10 years it is possible for you to to obtain a gratuity and an annuity earnings from the GEPF.
Earlier than 1 March 1998 authorities workers weren’t taxed on their lump sum. The tax-free lump sum is calculated when it comes to the ratio of years labored earlier than 1998 relative to the variety of years you may have labored for the federal government. The quantity ought to be mirrored in your profit assertion, to allow you to make an knowledgeable alternative.
Because of this your tax-free lump sum may be rather more than the R500 000 allowed by the present tax tables relevant to lump sums from retirement funds.
If the above applies to you, it might be finest to take the total lump sum that you’re entitled to tax-free, and make investments it in a discretionary funding from the place you may draw a tax-friendly earnings.
In some instances, it is perhaps prudent to withdraw as much as R1 000 000 of the gratuity because the tax payable on the lump sum shall be lower than the tax in your annuity earnings. The steadiness of your gratuity, which is able to then be taxable may be transferred to a residing annuity to keep away from paying tax on it.
Your retirement annuities
If a big penalty isn’t payable in your retirement annuities, it might be a good suggestion to withdraw them.
The one-third portion can then be invested elsewhere, and it may be left to develop with out attracting additional retirement lump-sum tax. You’ll be launched from the Regulation 28 necessities of the place you may make investments and should you ought to go away, the trustees will now not have a say on who will get your funds.
On the residing annuity portion, you may select an earnings of between 2.5% and 17.5%. If in case you have sufficient earnings, you may select the bottom share of earnings and make investments the earnings in your discretionary funding.
Do you have to want extra earnings later, you may enhance the proportion.
Presently, we advise an earnings share of between 4 and 6% every year as being the only option, to allow your annuity earnings to develop sooner or later.
Working after retirement
You additionally plan to proceed working after retirement and also you requested should you ought to put money into a brand new retirement annuity once more.
Persevering with with a retirement annuity will certainly prevent tax.
Retirees typically overlook that they’re drawing earnings from numerous sources and all sources are taxing you as if you might be solely incomes the earnings from one supply.
You would need to maintain observe of your gross earnings and ask the varied sources that you’re drawing earnings from to regulate your tax charge. Both this or face an enormous tax invoice.
Put money into a brand new retirement annuity?
In the event you ought to put money into a brand new retirement annuity, which I assume can be quick time period, you may put money into it till the worth is slightly below R247 000.
Underneath the present Pension Funds Act, you may then withdraw this quantity as a lump sum, if it’s the solely retirement annuity you may have with the supplier.
I hope that this info will assist you to, and I want you all the perfect on this subsequent cycle of your life.
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