Choose re­tire­ment funds as your sav­ings ve­hi­cle of choice

Finweek English Edition - - INVESTMENT - »

Con­tri­bu­tions to pen­sion funds and re­tire­ment an­nu­ity funds cur­rently of­fer cer­tain tax de­duc­tions in re­spect of the con­tri­bu­tions that mem­bers make. In ad­di­tion to this, the growth in such funds is tax free as there is no in­come tax, cap­i­tal gains tax or div­i­dends with­hold­ing tax levied on the re­turns. At re­tire­ment any ben­e­fits taken as a lump sum will be taxed in terms of the re­tire­ment tax ta­ble – which again may re­sult in a favourable tax rate be­ing ap­plied. In ad­di­tion to the tax ad­van­tages of us­ing th­ese kinds of prod­ucts, there are two other ben­e­fits that should not be over­looked: (1) your funds in a re­tire­ment fund are pro­tected from your cred­i­tors, even in the event of in­sol­vency, and (2) are pro­tected from you your­self! Your ac­cess will be re­stricted, which will en­sure that you do ac­tu­ally have funds in place when you re­tire, and in ad­di­tion at re­tire­ment, ment, if you have a pe­nen­sion fund or RA, you will only be able to take up to a third in cash sh – en­sur­ing that at at least t wo thirds is used to pro­vide you with an in­come for life.

Of course, the more you save ave and the bet­ter ter your re­turns, the bet­ter that hat in­come.

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