SILVER CLINIC | Will my retirement pension be taxed even though I was taxed while I was working?
There is a specific scale according to which your benefits are taxed upon retirement.
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A Fin24 reader looking to cash in their retirement savings wants to know the tax implications.
I’m 57 and took early retirement last year in October due to Covid-19 regulations. Now I want to cash my money held by Alexander Forbes. My question is, will this money still be taxed, even though I was taxed every month while I was working?
Belinda Sullivan, Head of Business Consulting Strategy at Alexandre forbes respond :
I assume the reader has stayed paid in the fund and is now choosing to make their retirement choice.
First of all, you have to differentiate the taxable income, that is to say the tax applicable on the monthly salary that you receive from your employer, and the tax applicable to the accumulated money that you have saved in your retirement funds. As a member of a retirement fund, you would have benefited from certain tax deductions while contributing to the fund during all the years that you were employed. There is a specific scale according to which your benefits are taxed upon retirement.
This allowance is a one-time allowance for all of your retirement benefits, not just money in your current retirement fund, but if you have a retirement annuity and preservation money. Please note that this allowance also takes into account any prior withdrawal of benefits from any previous employer and / or severance money received.
Keep in mind that the amount you can access as a lump sum and the options available to you will depend on the type of fund you were on and the rules applicable to the fund. There are many options available to you when you retire.
It is always important to seek the advice of a certified financial planner to help you find the most suitable option for your personal situation.
Questions can be edited for brevity and clarity.