Resigning, retiring, or withdrawing money

Cashing out your pension when changing jobs might seem tempting, but in South Africa, this could cost you up to 36% in tax and rob your future self of compound growth. Consider these alternatives:

1. Preserve your savings in a retirement fund

• Transfer your pension/provident fund savings to a preservation fund. This keeps your money invested (tax-free) until retirement.
• Benefit: Avoid penalties and let your savings grow.

2. Transfer to a new employer’s fund

If your new job offers a retirement fund, consolidate your savings there. Check for:

• Lower fees or better investment options.
• Compatibility with the new “two-pot system” rules.

3. Use a portion for urgent debt (last resort)

If you must withdraw, use the “one-third” rule: take only what you need to avoid high-interest debt. For example, clearing a R50 000 loan at 20% interest could save R10 000/year.

Next steps

Explore preservation fund options by logging into the Employee Benefits Portal and selecting “Retirement Fund Transfers”.

Or, book your free 45-minute session with me today using the Contact button above.