Question:
My preservation fund from Allan Gray pays out Nov 2015. Will I be able to get the whole amount or only a portion? Also, I'm trying to find someone private to borrow an amount from to settle my expensive debt (credit cards etc), and will make that person my beneficiary on the Preservation Fund, until it pays out, by which time I will the be able to re-pay the loann immediately. I basically need the cash loan for a year, to get out of this high interest debt that I'm in. One pays and pays, but never seem to go forward, as interest just piles up. It's like 2 steps forward and 1 step back. I know I cannot borrow money from an institution and use my preservation fund as collateral, but perhaps someone will privately give me a 1-yr loan. Unfortunately I have no family to ask in this regard. Thanks - Ms Roux
Answer:
Siobhan, You are allowed one (full or partial) withdrawal from your preservation before retirement. You can then retire from the fund from age 55 onward. If you are in a provident preservation fund, you can take the whole amount as cash, net of lump sum tax. If you are in a pension preservation fund, you can only take up to one-third as cash, you must use at least two-thirds to buy an annuity. As you know, you cannot use your preservation fund as collateral for a loan. As this is not permitted, the lender would not have an enforceable right against the fund, and would therefore in effect be giving you an unsecured loan, which would not be very smart.
