LAURA DU PREEZ: Fee bonanza in offing for retirees who park savings
The change to the Income Tax Act can work in your favour in two powerful ways
Competition for your retirement savings after you leave an employer, including when you "retire" but park your savings and continue working, is set to get interesting with potentially positive spinoffs for the fees you pay on your retirement savings. Since 2015, you are not obliged to start drawing a pension when your employer retires you, but have the right to leave your savings in the fund or transfer them to a retirement annuity (RA) until you elect to retire and buy a pension or annuity. Employers may be eager to ditch older, higher-earning employees, but the National Treasury saw fit to allow you to preserve your retirement savings while you continue working - for example, as a consultant - after formal employment. The concession came partly at the behest of financial services companies seeking a resolution to the problem of complying with tax legislation when dealing with retirees who failed to inform their funds what portion of their savings to pay out as a lump sum and what ...
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