How much of my pension will be paid to my beneficiaries?


Question:

I have a pension fund with Liberty Life. I have not contributed to it for about 6 years as I've not had the means to. My Liberty Life financial adviser informed me that it has a current value of about R100k. I know that by law I've no access to the accrued funds until I reach retirement age. What I want to know is, if I accidentally pass away, will the specified beneficiary of my pension fund receive the entire accrual less the 25% government tax deduction stipulated on that sum? I.e. R75k, or will there be a bogus deflation of the total value of my pension fund due to it potentially being claimed BEFORE I reach my retirement age? Thank you kindly RW

Answer:

Walter

As you have stopped contributing to your retirement annuity, it is already paid-up. So you would already have incurred the penalty for that and there should be no further penalties if you decide to transfer your retirement annuity, or if you should pass away. The proceeds (as a cash lump sum) would be taxed as though you had received them as a retirement benefit. Assuming you have not previously withdrawn from a retirement fund, the whole amount (up to the first R315 000) would be paid out tax free.

The information and answers supplied in this section do not constitute advice as defined by the Financial Advisory and Intermediary Services Act, 37 of 2002.


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