LAURA DU PREEZ: How dipping into your savings can blow your retirement goals
More than two-thirds of South African retirement fund members do not preserve their retirement savings when they change jobs, and the average person changes jobs five to seven times in their lifetime. But not preserving your savings can have a devastating effect, as the case of Buyisile*, a 52-year-old engineer from Cape Town, shows. Buyisile had more than 30 years of service with an employer and had saved R3.6-million in his pension fund when he resigned last year to pursue his dream of owning his own engineering company. He followed the advice of his financial planner Buyi Nodada from Old Mutual Wealth to preserve his savings in a preservation fund. Members of preservation funds are allowed one withdrawal before the age of 55. So when cash flow became tight, Buyisile withdrew R 1.5-million from the fund. These were the implications Nodada said: Liable for tax Buyisile became liable for R387 000 in tax, which was deducted from the R1.5-million, so he received a little over R1.1-mil...
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