Retirement income: Know the options

2019-03-13 06:02
Annalise De Meillon-Muller

Annalise De Meillon-Muller

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In his budget speech in February, finance minister Tito Mboweni gave details of the government’s measures to reduce the public sector wage bill and counter the sluggish economy’s effect on public finances.

One of these measures is to allow public servants aged 55 to 59 to take early retirement, without it having any negative impact on their pension benefits.

The offer is available from 1 April until 30 September.

It is estimated that a maximum of 30 000 public sector employees will be considered, provided they meet the criteria of age and other criteria set by each sector department.

It is important to note that this process is completely voluntary.

The National Treasury will carry the cost of any penalties relating to the pensions of those who are approved to take early retirement, and the individuals will not suffer any financial loss as a result of taking early retirement.

Why is this option offered?

The government urgently needs to spend on critical areas such as health, education, social security and infrastructure, and this has to be balanced against its wage bill.

Government will ensure, when considering applications for early retirement, that service delivery is not affected and that those with scarce and critical skills, such as doctors, are retained.

Those considering taking up this offer should obtain advice from a qualified financial adviser in order to understand the different retirement income solutions available.

Each of these solutions has its own advantages and disadvantages, relative to the personal circumstances of the individual concerned.

Combining different solutions may provide a better outcome in the form of a more sustainable, long-term retirement income and the provision of a legacy for dependants.

Retiring as a public servant

The retirement rules of the specific fund will apply. Depending on the number of years’ service with the fund, the following options are available:

  • Cash lump sum only – if less than ten years’ service.
  • Cash lump sum and monthly annuity (income) – if more than ten years’ service.

Proper advice is critical

Navigating the retirement journey alone can be daunting.

A qualified financial adviser can look objectively at your financial situation and advise accordingly. Advisers working with Glacier by Sanlam have access to our Retirement Income Planner web-based tool, which assists with the decision by showing the end results of selecting a particular product or combining different products.

Some of the options available will be discussed in a series of articles in Express over the next few weeks.

Find out more

Jenwil BlueStar Financial Advisory Services, in partnership with Express, will host a conference in Bloemfontein on 10 April.

Dinash Pillay of Glacier by Sanlam will be on hand to answer any questions.

Attendance is free, but booking is essential. Call Cassey-Lee Labans or Trish Rodrigues on 051-447-0463, or send an email to office@­jenwil.co.za.

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