Choose retirement funds as your savings vehicle of choice
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.