Question:
What are my options for a MATURED provident preservation fund? I had these funds for a specified period of years in a provident preservation fund and now it has matured.
Answer:
Prem, You can leave the money invested in the provident fund for as long as you wish. When you wish to access the money, you can take it all as a cash lump sum (net of retirement lump sum tax - the first R500 000 will not be taxed if this is your first withdrawal from a retirement fund), or you can use any part of it to buy an annuity (for that part you are only taxed on the annuity income). You can choose between a living or a guaranteed annuity. If you take the whole amount as cash, you are then forced to consider how you will invest this money, so that you can draw a regular income without exhausting the capital too quickly. You need to consider you asset mix (how much money will you invest in shares?) your preferred investment strategy (active or indexing) and the fees you pay (the lower the better). This is where a 10X Living Annuity could come in useful.
