When You Retire
It is important to consider your options when you retire
- At what age is it best to retire?
- Should you draw your pension immediately or defer it for later?
- What is a life annuity compared to a living annuity?
- What are your pension options when you retire?
- What are the advantages and disadvantages of the different pension options?
- Choose the In-fund Living Annuity option and remain a member of the Fund.
- Always get expert financial advice.
AT WHAT AGE IS IT BEST TO RETIRE?
The later you retire, the more pension you will receive. RETIRING AT AGE 63 RATHER THAN 53 CAN ALMOST DOUBLE YOUR RETIREMENT INCOME. Retiring just two years later can add up to 15% additional retirement income.
If your pensionable salary on retirement is R10 000:
Replacement Ratio
is the percentage of your salary that is paid to you as your pension when you retire.
OPTION A: DEFER YOUR PENSION
THIS MEANS THAT WHEN YOU RETIRE FROM WOOLWORTHS,YOU KEEP YOUR RETIREMENT
SAVINGS INVESTED IN THE FUND.
If you keep your retirement savings invested in the Fund:
- Your Fund Credit will stay invested in the Fund.
- You and Woolworths will no longer be contributing to your Fund Credit.
- You will no longer have all of your usual benefits, such as life or disability cover.
- You will still be subject to investment and admin fees.
- Your Fund Credit will be subject to positive or negative investment returns. But remember, your retirement savings are long-term.
We recommend getting financial advice from a qualified financial adviser. Contact Alexander Forbes Individual Advice Centre (IAC):
Call 0860 100 444 or email iac@aforbes.com
Call 0860 100 444 or email iac@aforbes.com
DEFER IN THE FUND
- You keep your money in your employer’s retirement fund.
- Fees and costs may be less than with other options.
- You will stay invested in the investment portfolio that you were invested in when you retired. That is unless you are invested in a closed portfolio or make an investment switch.
DEFER OUTSIDE THE FUND
- You transfer your money into an approved retirement fund until you are ready to withdraw.
- When deciding to transfer, consider the fees and whether you can continue making contributions.You should always get advice from a certified financial planner.
OPTION B: DRAW YOUR PENSION
IF YOU WANT TO START RECEIVING AN INCOME WHEN YOU RETIRE FROM WOOLWORTHS,YOU CAN DRAW YOUR PENSION.
The Woolworths Group Retirement Fund is a pension fund. This means that when you retire, you are required to buy a pension with a minimum of two thirds of your Fund Credit.
Your Fund Credit
During your working life you contribute a part of your salary to the retirement fund. Your employer also makes contributions. These contributions are invested for you and accumulate over time. The total amount is called your Fund Credit. The smaller your Fund Credit, the less pension you will receive when you retire.
Your options when you retire
- You can use your full Fund Credit to buy a pension.
- You can take up to one third of your Fund Credit in cash. You must then buy a pension with the balance of your Fund Credit.
- The Income Tax Act states that if your fund credit is less than R247 500 then you can withdraw the entire amount as a cash lump sum.
The cash lump sum is taxable
- The cash lump sum is taxable.
- However, the first R550 000 is tax-free and you will be exempt from paying tax on this – provided that you have not already withdrawn from a retirement fund prior to your retirement.
- During your lifetime, you can withdraw a total of R550 000 of your retirement savings tax free.
Points to consider
- What is your current cost of living?
- Once you retire, how much money will you need every month? Take inflation into account.
- How is your health? Will you be able to cover unforeseen medical costs?
- If you have a spouse, will your spouse need an income if you die?
- Do you have any other savings to boost your income?
- Do you need to leave money for your loved ones when you die?
2 Years to Retirement Workbook
At Woolworths, the compulsory retirement age is 63. It is ideal to work and save right up to your retirement day to ensure that you have enough money to live on when you retire.
Retirement may seem like it's still a long way off, but a lot of planning and preparation needs to take place between now and then to ensure that you have a smooth and hassle-free retirement.
An A-Z for When you Retire
This brochure recaps your retirement benefits and provides you with important information that you will need to make a smooth transition from being an employee to becoming a retiree.
Find out more about your activities, funeral benefits, insurance, meal vouchers, etc.
Retirement Forms
