• If you were 55 years and over on 1 March 2021, you will still be allowed to commute your full retirement benefit as a cash lump sum.
• If you were younger than 55 on 1 March 2021, your retirement benefit which accumulated up until 1 March 2021 plus interest accrued up until retirement, may be fully commuted as a cash lump sum. This is referred to as the ‘vesting portion’.
• Benefits accumulated after 1 March 2021 plus accrued interest is subject to a maximum one-third cash withdrawal and the remaining two-thirds must be used to purchase a pension. This is referred to as the ‘non-vesting portion’.
• If the non-vesting portion is less than R247 500 at retirement, you can commute the full amount as a cash lump sum.
• You must use a minimum of at least two thirds of the value of your retirement product to purchase an annuity that will provide you with an income. You can use more than two thirds.
• The two thirds can be used to purchase either a living annuity, life annuity or a combination of both.
• These various annuities have different implications, restrictions and rules. Please see the articles above for more detail.
• Your chosen annuity will provide you with either a monthly, quarterly, half-yearly or annual income payment. This income will be subject to tax.
• Money that can be left to your beneficiaries when you pass on will depend on the annuity type chosen.
• It’s a big decision and there is a lot to consider - we suggest getting good financial advice to make an informed decision.