The Money Guide: Retirement (part 4)
What happens to your savings when you retire?
We set out all the possibilities for you
Reaching retirement after many years of saving in a retirement fund enables you to make some choices. Knowing your options and the implications of your choices can make a difference to your finances for the many years you hope to spend in retirement. Provident funds have traditionally paid out the full benefit on retirement. In 2016, the Pension Funds Act was amended and the requirement on members of provident funds to purchase an annuity or monthly pension on retirement was introduced for new contributions after the effective date. However, the effective date has been delayed indefinitely as discussions about social security benefits continue between unions, the government and business. For now, the difference between pension and provident funds on retirement remains: pension-fund members (including members of retirement annuities) may withdraw up to one-third of their savings as a lump sum and must use the remaining two-thirds to buy a monthly pension or annuity, while provident-f...