Question:
I am 67 years old and still fully employed. I can continue to do so for the next few years. Can I terminate my pension, invest in a preservation fund for the next two years and thereafter buy a pension annuity?
Answer:
Will,
Once you have reached normal retirement age as per your employment contract/fund rules, you no longer have the option to preserve your savings on leaving your retirement fund/employer. To delay buying the pension annuity, you would have to stay with your current employer. If you are staying with current employer, you can take late retirement (ie keep contributing and keep your money in the fund).
If you need to leave the fund because you are changing employer, your other options would be to purchase a living annuity initially (and just claim the minimum 2.5% pa) and thereafter buy a conventional annuity once you do retire. This may however result in unnecessary costs. Or you could be just a bit "tardy" in terms of claiming your retirement fund money. This may buy you a few months, or even a year, until they decide to transfer your money to an unclaimed benefits fund. As you should be invested quite conservatively at this stage of your life, even if they transfer you entirely in cash while they wait for your claim/instruction form, the opportunity cost of missing out on potentially higher equity returns would be quite modest.
