Question:

I am 56 year old female and on incapacity leave.Please can u advise whether I should consider medical boarding or resignation and what the advantages and disadvantages of either options are.

Answer:

If you retire early due to ill health from a pension fund, you will be compelled to buy an annuity with two-thirds, but you will pay less tax on the one-third cash lump sum than if you resign. If you resign from a pension fund, you will pay more tax on your cash lump sum, but you can then take the whole amount as cash. If you belong to a provident fund, and you plan to take the whole amount as a lump sum, it would pay you to retire early, as you will pay less tax, and you can still take the whole amount as cash.