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Withdrawal Options 
 

What options do I have at withdrawal?

When you leave the Fund, you have the following options:

1. Leave your benefit in the UCT Retirement Fund (Deferred Pensioners). In this case you will only receive a benefit once you retire 
2. Take your money in cash (but beware of the tax payable)
3. Transfer your money to a new employer's Pension and/or Provident Fund
4. Transfer your money to a Retirement Annuity Fund
5. Transfer your money to a Preservation Fund
 
Leave your benefit in the UCT Retirement Fund (Deferred Pensioners)

If you leave your money in the UCTRF, you may receive your retirement benefit at any time from age 55 onwards. Alternatively, you may transfer your funds into a preservation fund or retirement annuity of your choice before you retire. Previously this was not allowed but has now been enabled so that you can continue to preserve your funds until retirement, while allowing you to choose the preservation or annuity of their choice.

Administration and other fund costs will be deducted from your Accumulated Retirement Savings if you decide to leave your money in the UCTRF. You also have the advantage that the Trustees monitor the performance of the investment managers with whom your money is invested on an ongoing basis. Should you elect this option you will be required to preserve your benefit as a whole, i.e. you may not take a portion in cash and leave the balance in the UCT Retirement Fund.

Of course the advantage is that you are "forced" to preserve your benefit for your retirement.

Take your money in cash

This is a tempting option for most of us; however, this might mean the difference between a retirement of leisure and one filled with financial worries.  If you take your money in cash, you may also pay a significant amount of tax, as only a small portion is tax free. Please refer to the Taxation of Benefits section.
 
 
Transfer your money to your new employer’s Pension and/or Provident Fund
 
When you transfer money between two pension funds, the transfer is tax free.  The same goes for transferring money between two provident funds, and also for transfers from a provident fund to a pension fund.  There might be some reasons why you elect not to transfer your money to your new employer’s funds, but not to worry, you have two other options.
 
 
Transfer your money to a Retirement Annuity Fund

Transferring your money from this fund to a retirement annuity fund on withdrawal would be tax-free. There is a range of retirement annuity funds to choose from with an assortment of different investment options.  Speak to your financial advisor on the different options available to you.  A retirement annuity works exactly like a pension fund, in that at retirement you will only get one third in cash and the balance must be used to purchase a life-long pension from a registered insurer.  You may make monthly contributions towards a retirement annuity, and a certain amount is tax deductible.
 
Please Note: You do not have the option to withdraw your money from a retirement annuity fund, before retiring. Therefore, you can only access your money at retirement, which can be any time after the age of 55.
  
Transfer your money to a Preservation Pension or Preservation Provident Fund

There is a range of preservation funds to choose from with an assortment of different investment options.  Speak to your financial advisor on the different options available to you.  There are preservation pension and preservation provident funds, so you may decide to transfer your benefit from this provident fund to a preservation provident fund.  This is a tax free transfer.
 
When you retire from a preservation provident fund, you can take the entire amount as a cash lump sum.
 
You can retire from a preservation fund between the ages of 55 – 70 years. You may not make monthly contributions towards a preservation fund.
 
You can transfer from one Preservation Fund to another, but there are costs involved. 
 
The main disadvantage of this option is that your costs are higher compared to leaving your money in the UCT Retirement Fund.  You could pay commission at entry and the on-going administration fee could be as high as 0,5% per annum of the market value of your assets. The investment management fee could be as high as 1,5% per annum of the market value of your investment.
You (or your advisor) also need to monitor the performance of the investment managers with whom your money is invested on an on-going basis.
 
Differences between the various options  
 

 

Cash Benefit

New Employer's Provident Fund

Retirement Annuity

Preservation Pension or Provident Funds

Monthly Contributions allowed

n/a

Yes

Yes

No

Future withdrawal allowed

n/a

Yes, but only on resignation, retrenchment, or dismissal

No

Yes

Benefit Taxed

Yes

No

No

No

Retirement Benefit

n/a

Entire amount in cash or a pension or a combination of above

1/3 cash, balance pension

As per Pension / Provident Fund