Hi There I have been working for the government for 10 years and I would like to resign ( GEPF) . Is there a way to use some Of my pension and put the rest into a Preservation fund. What % is taxed? Thank you
Reply
Per their rules, you cannot take a portion as cash and preserve the rest. What you can do is transfer the whole amount into a preservation fund. You can then withdraw up to one-third as cash but you must then use the remainder to buy an annuity at retirement. The cash you draw will be taxed as follows: your benefit relating to pre 1 March 1998 is not taxed, the benefit relating to post 31 March 1998 service is taxed per the withdrawal lump sum tax table. The benefit is split on a straight-line basis (pre and post 1 March 1998 service, based on the number of completed years’ service). The withdrawal lump sum tax table is as follows: the first R25,000 is not taxed, the balance to R660,000 is taxed at 18%, the balance to R990,000 at 27% and the remainder at 36%. This will happen in any case at retirement.
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