Your Family - April 2017

32 yourfamily.co.za

MONEY SMART

TIPS AND TRICKS TO SAVE YOU A BUNDLE!

If you’re considering a job change,

dipping into your retirement savings

might not only be tempting, in the case

of retrenchment it may even seem

necessary. However, it may harm your

long-term financial health.

When you leave an occupational

retirement fund, you generally have

two options: cashing in your savings

or transferring them into either a

preservation pension or provident fund.

If you decide to cash in, know that a

small portion will be tax free, but the rest

of it will be taxable at a rate determined

by SARS. It’s an irreversible decision and

you’ll have to start your retirement savings

from scratch. The hard truth is that you’ll

now have less time to save. According to

Sanlam’s 2016 Benchmark Survey, 63% of

Make sure your will is valid by

confirming:

It’s in writing, handwritten, typed or

printed. Any person over the age of

16 may draw up a will.

It’s signed and witnessed by two

eligible witnesses (they must sign

in your presence and in each other’s

presence). Witnesses may not be

listed as beneficiaries in the will, and

must be at least 14 years of age.

Each page is signed. The witnesses

only need to sign the last page.

Any codicils (amendments to

the will) need to fulfil the same

requirements of the original, but

do not have to be signed by the

same witnesses.

DEATH BENEFIT CAUTION

Did you know that your death benefit

trustees can override your beneficiary

nominations? The Pension Funds Act

gives the trustees of your fund final say,

even though they will be guided by your

final wishes. If there is an individual who is

financially dependent on you, that person

may be allocated a payout even if they

aren’t nominated.

Any person listed as a beneficiary is not

necessarily entitled to a payout, explains

Preenay Sathu from FNB. Trustees will

consider the age of the nominee, nature

of their relationship to the deceased, the

extent of financial dependence on the

deceased, their financial standing as well as

their earning potential. These factors may

sway trustees to consider beneficiaries that

have not been nominated at all.

To avoid delays and confusion for your

dependents, let your financial advisor

know of anyone who depends on you

financially, in addition to your stated

beneficiaries.

If you’ve changed

jobs a few times and

have more than one

preservation fund in

place, investigate whether

you can lower your fees

by selecting a more cost-

effective fund. Even a

small reduction could pay

off in the future.

people who cashed in their savings didn’t

realise the impact this would have on their

retirement income at the time.

C

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i

ng jobs

Transferring your savings into a

preservation fund, on the other hand,

means only you will reap the benefits

in the future. You’ll continue to enjoy

the compound growth on your initial

investment as well as the returns you’ve

previously generated. You’ll only be taxed

on retirement.

6%

The percentage of South

Africans who can afford

to retire comfortably.

WHERE THERE’S A WILL...