My Money Matters Toolkit - Leaving your employer

Your options when leaving

What you need now can seem more important than what you might need in the future. Making use of the relevant information, support and advice available to you makes it easier to reach your shorter-term and longer-term goals.

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The important decision you need to make now

Leaving your job often leads to making other changes in your life that affect your finances

Other useful information about your retirement fund

The decisions you make when you leave your employer affect your financial future

Your retirement savings decision

How can you protect your retirement fund savings for your future self when you change jobs?

You can keep your money invested.

To help you keep your savings invested, find out more about the options you have when you leave your employer by:

Watching this video, or
Reading this brochure.

If you’d like to keep your retirement savings invested for your future self to reduce the risk of not having enough to live on after you retire, these are your options.

Tip!
Keep your retirement savings invested in your savings pot instead of withdrawing this money in cash so that you can use it to buy a pension that you can live on one day when you are no longer working.

Find out more about your retirement saving options as you prepare to leave your job

For more information that's specific to your fund or employer's benefits find out more

Watch

this video to find out more about your options

Read

this brochure for more about your options

Read

to find out more about the importance of having a will and keeping your beneficiary nomination form updated

What happens to my retirement savings if I emigrate?

Speak to a licensed financial adviser on 0860 000 381 or email mymoneymatters. Find out what you can do with your savings and what the tax implications are.

Find out more

Is someone you know leaving their employer?

Email them a link with important information that will help them through the decisions they will need to make when it comes to their retirement savings and changing employers.

Send the link

Get on top of debt

Two important things that help you stay on top of your debt:

Keep track of your credit report. According to the National Credit Regulator, you are allowed to access your credit report once a year for free. Visit NCR to find out more.
Using debt wisely.

Know your credit score

Credit bureaus calculate your credit score based on your spending and how you manage your finances. They will give your credit report to any shop or financial company that you request a store card from or apply to for a personal loan. Make sure you know what’s on your credit report and that it’s all correct. Review your credit report at least once a year to assess and improve your position, if need be.

You can request your credit report from any of the major credit bureaus.

Some tips if you are thinking about borrowing money.

Be honest about how much you can actually afford when applying for credit. Don’t guess your expenses. Use your actual expenses from the last year and make adjustments for any increases you think are likely to have in the future.
Understand what you are signing and agreeing to in all the terms and conditions.
To pay off your debt faster, you need to pay more than your minimum monthly installments. It’s generally a good idea to try to pay off your most expensive debt (debt with the highest interest rate) first.

A debt-to-income ratio is calculated as follows:

Monthly debt repayments monthly salary before tax 100.

What type of investment portfolio should I choose if my fund offers me a choice?

Every month, you and your employer make contributions to your fund. These contributions are invested to make your savings grow with interest as fast as possible. Investments are an important part of any retirement fund, especially in the case of a defined contribution fund, where the members carry the investment risk. This means that the growth on the portfolios that your retirement fund savings are invested in will have a big impact on how much money you’ll get one day when you retire or leave the fund.

It’s important for each retirement fund to have a well-thought-out investment plan so that your retirement savings can grow over time. The trustees, in general, will offer a range of investment portfolios to cover the different needs of all the members.

The higher the risk, the higher the expected reward. And the lower the risk, the lower the expected reward. You want to find the right balance based on your age, your stage in life and your own circumstances.

How do you get your retirement fund savings to make more money for you?

An investment portfolio can have portions invested in various Investment types, called ‘asset classes’. The spread across investment types is known as ‘asset allocation’. The main investment types or asset classes that your fund can invest in are shares, bonds, property and cash.

Investment portfolios are divided among different asset classes and investment managers are responsible for determining which mix of assets should be held in a portfolio.

The best asset allocation for you at each stage of your life will depend on how many working years you have left until retirement (your ‘time horizon’), as well as your ability to tolerate investment risk.

Investment classes and time in the market

Time will determine where and how you invest. It’s important to look at how the different types of investment classes have performed over time.

Access more information on shares, bonds, property and cash here.

Other useful information about your retirement fund

What’s a retirement fund?
When you’re no longer earning a salary at the end of your working life, you can use your savings in your retirement fund to buy a pension that will give you regular income. Your employer has provided you with a provident or pension fund.

How does a retirement fund work?
- Every month, you, your employer or both make contributions to your fund.
- One-third goes into a savings pot and the other two-thirds goes into a retirement pot. This is called the two-pot system.
- You can withdraw from your savings pot once in a tax year (1 March to 28 February). Your retirement pot must, by law, be preserved until you retire.
- You can use your retirement savings to buy a pension that will give you a regular income in retirement.
How much your pension will be depends on:
- how much you or your employer contribute during your working life
- how investments have performed
- whether you keep your retirement savings invested instead of taking them in cash when you change jobs
- the cost of buying a pension when you retire
What is a benefit statement?
A benefit statement shows:
- how much you’ve saved in your savings pot and your retirement pot so far
- the pension you can expect based on the information we have about you
Here’s an explanation of your benefit statement.
View your benefit statement by registering on AF Connect. Your benefit statement will tell you how much you’ve saved and which portfolios your savings are invested in. You can also download the AF app on the Apple App Store or the Google Play Store.
How much tax will I have to pay if I withdraw some or all of my retirement savings in cash when I change jobs?

With the new two-pot system, you can withdraw cash from your savings pot once in every tax year (1 March to 28 February). If you’ve made a withdrawal from your savings pot during the tax year, you won’t be allowed to make another cash withdrawal from your savings pot when you leave your employer. Although, if you have a small amount in your savings pot, you may be allowed to withdraw it. Withdrawing from your savings pot is taxed at your marginal tax rate – the same rate of tax you pay on your salary.

Remember, during your lifetime, you can take a total of R550 000 of your retirement savings tax free on retirement. However, all amounts you withdraw in cash (exceeding R27 500) before retirement will reduce this amount. How much you are taxed depends on how much you take and when you take it.

SARS sets the amount of tax you pay on any amount you withdraw. This can change from time to time. The latest information is available on SARS’ website. A financial adviser can help you work out how much tax you may need to pay if you plan on withdrawing any of your retirement savings in cash when you leave your job.
What happens to my retirement savings if I am retrenched?

If you decide to withdraw any of your retirement savings in cash if you are retrenched, you may have to pay tax. SARS sets the amount of tax you pay on any amount you withdraw, depending on how your employer has classified your retrenchment. The rate of tax you must pay changes from time to time. This information is available on SARS’ website. A financial adviser can help you work out how much tax you may need to pay if you plan on withdrawing any of your retirement savings in cash when you have been retrenched.

It is especially important to have the support of a financial adviser if you have been retrenched, especially if you don’t find another job straight away or think you’ll struggle to cope financially. A financial adviser can help you make the most of what you have and try to keep as much of your retirement savings invested for your future self at the same time.
What happens to my retirement savings if I don’t make a decision when I leave my employer?

My retirement savings will stay invested so that they can carry on growing.

It is very important for you to keep your contact and other details up to date with Alexforbes so that you can keep receiving information about your retirement savings.

Please get in touch with the Client Contact Centre to update your details.