Options on Resigning from a Provident or Pension Fund

Pay tax, take a lump sum, purchase an annuity or transfer?

GIB Employee Benefits, the retirement fund administrator of the Destiny Retirement Funds comments as follows:

Option 1: Cash Withdrawal

If you decide to take your Fund Credit in cash, the tax calculation that applies from 1 March 2009 is:

The table applies cumulatively over the lifetime of the member, which inter alia means the tax-free amount only applies to the extent that it has not been depleted in respect of previous withdrawal benefits accruing after 1 March 2009.

Option 2: Transfer to new employer’s Retirement Fund

You may transfer your Fund Credit to your new Employer’s Fund.

In order to do the transfer we will need the following information:

• Name of Fund

• FSB and SARS approval numbers

• Bank details of the Fund

• Contact person’s details at the Company who deals with the Fund.

Option 3: Transfer to a Retirement Annuity Fund (RA)

You can transfer your Fund Credit tax-free to a retirement annuity fund. Those who are self-employed after leaving their previous companies often prefer RA’s as they can save for retirement by contributing to it monthly.

Retirement Annuities may only be matured from age 55. When you mature it, you may withdraw a maximum of one-third as cash and the balance must be used to purchase an annuity which will then pay you a monthly income until your death.

Option 4: Transfer to a Preservation Fund

A Preservation Fund is effectively a paid-up Fund in your own name. This means that it is a once off investment and you may not add to it every month. Your Fund Credit is transferred tax-free. The advantage of using the Preservation Fund option is that you have a single option to withdraw funds as cash, should you require it before retirement. On accessing this money before age 55, you will still lose money to tax. This tax rate will be as per current legislation.

The Destiny Preservation Fund was specifically established to enable resigning members of Destiny Employers to transfer seamlessly and at low cost, whilst retaining the option of the existing investment strategy/portfolio choice. We don’t charge a financial advisory fee to Destiny members and for larger amounts we offer reduced administration/policy fees.

For further information or assistance please contact a GIB Financial Services advisor:

P.O. BOX 3211, HOUGHTON, 2041

GIB House, 3 West Street Houghton

Information provided by GIB Employee Benefits on behalf of the Destiny Umbrella Retirement Funds.

Email: destiny@gib.co.za / TEL: (011) 483-1212