Question:
Will I receive my full retirement benefit when I retire at age 55 and will the company give their share too? Please help. Regards
Answer:
Elizabeth,
We require more detail, to answer your answer specifically. In principle, assuming you belong to a defined contribution fund (either a pension or provident fund) then, fund rules permitting, you are legally permitted to retire from that fund from the age of 55 (provided you leave your employer). You will then receive the total balance of your investment account, made up of your AND your employers’ contributions (net of any deductions for risk benefits and admin costs at the time the contributions were made) as well the net (after-cost) investment return on those contributions.
If you are a member of a provident fund, you can elect to receive the "full benefit" as cash. If you are a member of a pension fund, you must use two-thirds of your balance to purchase an annuity. These options have different tax consequences. If you with choose to receive a lump sum, then lump sum tax will apply (for example, the first R315 000 is not taxed). If you choose or have to to buy an annuity, then only the income you receive from that annuity will be taxed.
