|Retirement annuity fund||
|New employer’s fund||
*This option is not recommended. Speak to a qualified financial adviser before you take cash from your retirement fund. You can also contact the Alexander Forbes Advice Centre on 0860 100 444.
Section 37D of the Pension Funds Act allows for specific deductions from your benefit when you leave your fund. These may for:
If you withdraw from a fund and don’t claim your benefit for any reason for a specific time period, it will be seen as an unclaimed benefit. According to the Pension Funds Act this time period is 24 months.
No tax will apply to a benefit that becomes unclaimed and funds are allowed to transfer this unclaimed benefit to an unclaimed benefit fund.
If you resign or are retrenched or dismissed, the rules of your fund will set out exactly what benefits you are entitled to. This benefit can be either transferred to another fund chosen by you, or taken in cash.
The trustees don’t recommend taking your benefit as cash. This money is meant for your retirement and should be preserved as much as possible. A transfer to another fund is recommended. Also remember that a withdrawal benefit taken in cash is heavily taxed.
You can use the projection tool and tax calculator to determine the long-term effects of your decision. However, you should get professional financial planning advice. Alexander Forbes Financial Planning Consultants (FPC) has a specialised division, the Individual Advice Centre that focuses on giving financial planning advice and service to new and existing clients.
Telephone: 0860 100 444 (Monday to Friday - 8am to 5pm)
This depends from employer to employer and fund to fund. In many cases your employer will continue contributing to the fund for the duration of your maternity leave provided you also continue contributing to the fund. If you stop making contributions while on maternity leave, your employer will only continue to pay for your death and disability insurance.
Details on how maternity leave will affect your fund membership are available from your human resources department.
If you get divorced, your spouse could get a portion of your benefits in the fund.
In terms of the Divorce Act, part of your retirement fund benefit is recognised as an asset. The value of this asset (which could be divided between you and your spouse) is called the “pension interest”.
The Divorce Act doesn’t state that the pension interest must be divided or how the actual division should be worked out. This is up to the parties involved and is described in your divorce agreement. If your divorce agreement includes the division of the pension interest then you must get a valid court order and submit it to the fund.
Members who are getting divorced should contact their fund concerning their divorce settlement agreements before the settlement agreement is made an order of court. In the long run this will save you time and money.
A divorce order and your retirement planning
Legislation regarding divorce and your pension fund benefit is complicated and different scenarios apply to different situations. Best practice advice is to seek competent legal advice in this matter.
If you have a divorce order that needs to be claimed against an Alexander Forbes administered fund, you will need to contact our team dealing with the divorce orders by emailing firstname.lastname@example.org, faxing 011 263 0901 or phoning the Helpdesk at 011 3243401.
The term Section 14 transfer is a legal process that moves money from one fund to another.
It is a compulsory transfer that takes place when your benefit in a fund is moved to another fund because:
The fund is responsible for all the legal documents. The Financial Services Board (FSB) has put checks and balances in place to make sure that members are not disadvantaged when their money is transferred. The fund must make sure that members are informed about and agree to a compulsory transfer and that the full values of their benefits are transferred. The Section 14 transfer must also be clear about when and how interest, if any, will be added to the benefit.
The fund must submit the application for the Section 14 transfer within 180 days after the effective date of the transfer to the FSB. The money must be paid to the transferee fund at least 60 days after the FSB approves the transfer. A Section 14 transfer is usually a lengthy legal process because of the paperwork involved. It can take even longer to finalise if the FSB has a query.
You can contact the fund’s administrator through your human resources department or payroll office if you have any queries about a Section 14 transfer.
If your money is transferred out of a fund when you leave a fund due to your resignation, retrenchment or dismissal, a recognition of transfer form must be completed and no Section 14 transfer is required.
Like a Section 14 transfer, a recognition of transfer moves money from one fund to another. However, the ROT is sent to the new fund where the money is being transferred to. The signed ROT is returned to the original fund and then the money is transferred. The money is transferred tax-free to another approved fund which can be either a preservation fund, a retirement annuity or your new employer’s fund.
Although tax will not be taken from your benefit at the date of transfer, your administrator may have to make a deduction allowed by Section 37D of the Pension Funds Act for:
A recognition of transfer must be completed when a member leaves a retirement fund because their employment has ended because of dismissal or retrenchment or when they resigned.
The administrator of your current retirement fund completes the documents for you. You need a tax number to complete the process. This is another reason to have your tax affairs in order. If the money remains unpaid in your previous fund, it could become an unclaimed benefit.
If a benefit from a fund is not claimed, it will be regarded as an unclaimed benefit.
Usually benefits become unclaimed:
Usually the rules of your fund will say that if the benefit is not paid to you within a certain time period then the benefit becomes unclaimed, this is usually 24 months.