Question:
I phoned Alexander Forbes who told me my pension fund documents are at SARS for processing and they are awaiting feedback. How long does this take? I am really in debt and didn't think the company that I sacrificed my life for would hold my pension fund documents for one month before releasing it. I resigned on 6/12/13.
Answer:
Hi Logan,
When you withdraw or retire from your employer's pension fund, and opt to receive a portion as a cash lump sum, the administrator must revert to SARS for a tax directive. The reason for this is that lump sums are taxed on either the withdrawal or retirement lump sum tax table. These tables are applied on the cumulative amount of all the lump sums you may have received from this and/or previous retirement funds.
Only SARS keeps track of any previous lump sums you may have taken. Their turn-around time is normally quite quick, only a couple of days, provided your tax affairs are in order.
It typically takes between 4 and 12 weeks to process a retirement fund pay-out (21 business days at 10X Investments), from the time your last contribution is invested or the required instruction forms are received by the administrator (whichever is the later). If you stopped working in November, then your employer has held up the process, but if you still worked a part of December (as your resignation date suggests), then your last contribution would only have been invested at the end of December or early January and your process would not be delayed by your employer handing in the forms in January only.
For information about preserving your pension fund capital, read more here.
Or, if you would prefer, speak to a consultant about the benefits of a preservation fund.
