MONEY CLINIC | Can I change the reason for leaving my job from early retirement to a resignation?

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The tax table that applies to a retirement benefit is more favourable than that on resignation.
The tax table that applies to a retirement benefit is more favourable than that on resignation.
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A Fin24 reader plans to leave his job and has stated the current reason as early retirement - but he wants to change it to a resignation. Wanting to know if this is possible. He writes: 

I am in the process of leaving my employment. The reason I had given was early retirement; however, I have been informed that I can't access my retirement lump sum. I want to change my reason for leaving to a resignation. Can it still be changed?

Belinda Sullivan, head of corporate consulting strategy at Alexander Forbes responds:

While you may not be able to access your full benefit in cash, you will be in a position to access up to a maximum of one third of your benefit in cash (after tax), assuming you are in a pension fund. The balance of your benefit will then need to be used to buy a monthly pension. The tax table that applies to a retirement benefit is more favourable than that on resignation. Remember that any money that you have may have accessed as a benefit before will impact the amount you can receive tax-free.

Your reason for exit is based on your agreement with your employer. Should you have agreed with your employer to retire, you may be in line to receive certain company benefits as a result that may potentially fall away should you resign from employment.  Any such benefit will be based on your contract of employment with your employer. You may change how you wish to exit the fund provided your benefit payment has not already been processed and part of your benefit transferred into another pension (annuity) vehicle. 

On retirement or exit from a retirement fund, retirement benefit counselling must be made available to help members understand the options available in their fund. There are many options and advice is very important to fully understand the actual impact on your benefit and what could really work for your personal circumstances. 

Questions may be edited for brevity and clarity.

  • Have a money problem that needs solving? Fin24 can help! Send your question to editor@fin24.com

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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