When you exit the Fund due to resignation, retirement, dismissal, or retrenchment, your full member share becomes payable as a lump sum.
Your benefit is made up of your contributions plus the employer’s contributions plus all investment returns, minus the amount you pay towards risk cover and the percentage that is deducted for the running costs of the Fund.
On leaving the Fund, it is very important to remember that the main purpose of retirement funding is to provide you with a sustained regular income when you retire one day. It is therefore vital to consider the pros and cons of taking a cash lump sum when leaving your employment prior to retirement age. There are tax implications on lump sum withdrawals as shown in the table below:
|Lump sum tax deduction table at Resignation||Lump sum tax deduction table at Retirement|
|Resignation Benefit||Tax rate applied||Retirement Benefit||Tax rate applied|
|R0 – R25 000||Tax free||R0 – R500 000||Tax Free|
|R25 001 – R660 000||18%||R500 001 – R700 000||18%|
|R660 001 – R990 000||27%||R700 001 – R1 050 000||27%|
|R990 001 and more||36%||R1 050 001 and more||36%|
The Fund actively encourages members to preserve their retirement savings when exiting the Fund before retirement age, by considering one of the following preservation options:
- Become a deferred member: This option allows you to leave your resignation or retrenchment benefit in the Fund when you leave service. The money is preserved in the Fund and investment returns will be allocated each month (positive or negative returns).
- Transfer your benefit to a provident preservation fund: You may transfer your money to a provident preservation fund to provide for retirement. You could be able to make a one-off withdrawal depending on the rules of the preservation fund that you choose.
- Transfer to a retirement annuity: you will be preserving your benefit for retirement.
Remember that the Fund has appointed Efficient Wealth to provide members with financial advice. Please make sure you contact them to assist you in making the right choices and helping you to retire comfortably one day.
According to the rules of the Fund, the normal retirement age for all members is 60. You can however retire earlier, from the age of 50. However, it is important to note that any benefit payable prior to the age of 55 years will be taxed in accordance with the withdrawal tax tables of the applicable tax legislation. You are also allowed to retire after normal retirement age subject to your conditions of service.
Remember when you retire, your full member share becomes payable as a lump sum. It is important to have a retirement plan in place to ensure you don’t run out of money due to poor decision making. If you need assistance with your retirement planning, please contact our call centre on 0861 CRFUND (0861 273 863).