Retirement or withdrawal
Fund Benefits payable when you retire
All members of the LA Retirement Fund have a normal retirement age of 65, however, you may be eligible for early retirement from age 50. You may also choose to keep on working beyond age 65, but this will require the consent of your employer. Alternatively you may choose to retire from employment but elect to postpone receiving your retirement benefit from the fund to a later date (i.e. phased retirement from the fund). When you later choose to receive your retirement benefit from the fund, your original benefit on retirement from service will be increased or decreased by the relevant fund returns to the date that you made your final election and your benefit will be calculated in terms of the fund’s rules. In terms of the rules of the fund, your benefit is retained in the fund and will be debited with such reasonable expenses as the board of trustees may determine from time to time in line with the fund’s agreed practice.
When you retire, your member share can either be:
- Invested fully in the in-fund living annuity that will pay a monthly pension to you or
- Taken as a cash lump sum (a portion) with the balance used to purchase the in-fund living annuity or
- Invested fully in more than one annuity of which one may be the in-fund living annuity (Subject to SARS requirements)
- Taken as a cash lump sum (a portion) with the balance used to purchase more than one annuity of which one may be the in-fund living annuity (Subject to SARS requirements) or
- Transferred fully to a retirement annuity or preservation fund (Subject to SARS approval) or
- Paid out to you as a cash lump sum for you to invest or spend as you wish. This option is ONLY available to members who were 55 and Older on 1 March 2021.
Please note: The payment of cash lump sums on retirement is subject to the annuitisation rules that came into effect on 1 March 2021. Please click here to read more about this.
All insurance benefits (death, disability, funeral and the voluntary critical illness benefit) cease when you retire from the Fund. If you purchase the In-Fund Living Annuity you have the once-off option of purchasing an affordable funeral cover benefit for yourself and your spouse through Sanlam Sky Solutions. You may choose the cover amount applicable to your age group. The application form provides all the details you need – access it from the forms section of this website.
If you elected the Voluntary Extended Family Funeral cover benefit as an active member of the Fund, this cover continues into your retirement as you are already the policyholder of a Sanlam Sky Solutions policy.
The cash portion of your retirement benefit is subject to tax as shown in the tax table below:
Click here for a summary of the Fund options available to you on Retirement
With effect from 1 March 2019, legislation requires that all members must have access to retirement benefit counselling not less than 3 months before their normal retirement age. This is irrespective of whether you have a personal financial advisor assisting you. The Fund Counsellor will therefore make contact with you to ensure that you understand all the options available to you on retirement. If you are planning on retiring early, please contact the Fund Services Centre at least 3 months before your planned retirement date. The Fund Services Centre will put you in contact with a Fund Counsellor who will explain in detail all the options available to you.
Fund benefits payable when you resign or are dismissed from employment
If you end your service with your employer before you reach retirement age, you will, with effect from 1 March 2019, automatically become a paid-up member in the Fund. This means that your· member share will remain invested in your chosen investment portfolio and will therefore continue to be adjusted with investment returns. Your insured benefits will however stop at the date that you become a paid-up member. This means that your death and disability benefits, funeral cover (excluding your voluntary extended funeral cover, if applicable) and voluntary critical illness benefits stop when you become a paid-up member.
The Fund’s administrator will provide you with a paid-up certificate within 2 calendar months of the Fund having become aware of your resignation from employment. Please keep the certificate in a safe place as you will be required to supply it to your new retirement fund within 4 months of joining the fund.
You will remain a paid-up member in the Fund until you complete and submit a withdrawal claim form instructing the Fund what you wish to do with your member share.
Please read the paid-up member Q&A to understand all the options you have as a paid-up member.
When you resign, you have one of the following options:
- Remain a paid-up member in the Fund, thereby allowing your member share to continue to be adjusted with investment returns or
- Transfer your entire member share to another approved fund. This can be any approved retail fund or you can elect to transfer your member share to your new employer’s fund or
- Transfer a portion of your member share to another approved fund with the balance paid in cash* or
- Paid as a cash lump sum*.
* any cash lump sum elected is subject to tax.
Please note that you are given access to retirement benefits counselling prior to you making a selection on the payment of your Fund withdrawal benefit and before your Fund withdrawal benefit is paid to you or is transferred to another approved fund. Please contact the Fund Services Centre if you have not received a call from the Fund Counsellor shortly after you have submitted your withdrawal claim form.
Outstanding housing loan surety or other legitimate deductions
Any legitimate deductions will be made from your benefit irrespective of the withdrawal option chosen (i.e. cash, transfer to another approved fund or election to remain a paid-up member in the Fund). This is particularly relevant to members with outstanding housing loan balances at the time of resignation, dismissal or retrenchment.
The cash portion of your withdrawal benefit is subject to tax as shown in the tax table below:
All insurance benefits (death, disability, funeral and the voluntary critical illness benefit) cease when you resign, are retrenched or dismissed from employment and exit the Fund. These benefits also cease should you decide to preserve your withdrawal benefit and remain a paid-up member in the Fund on termination of employment.
Fund benefits payable on retrenchment
If you are retrenched before you reach retirement age, you will, with effect from 1 March 2019, automatically become a paid-up member in the Fund. Please refer to the section above entitled: Fund benefits payable when you resign or are dismissed from employment. The information contained in this section and the options available to you are also applicable in the event that you are retrenched.
In addition, you may be entitled to receive an additional amount paid to you by your employer via the Fund. This extra payment, if applicable, will be the lesser of:
- 100% of your member share; or
- The difference between your age and 65 years, multiplied by 8% and further multiplied by the amount of your member share value
This additional amount paid by your employer and received by the Fund, if applicable, is paid as a lump sum amount and is subject to tax. The same rate of tax applies as on retirement (refer to the retirement tax table above).
An important note about tax:
You are strongly advised to get professional financial advice before making any decisions regarding your benefit on exit from the fund. The tax you pay on retirement fund benefits is cumulative. This means that the tax you pay on one benefit will impact on other benefits you may receive from other funds. The tax scales are also progressive, which means that the bigger the lump sum benefit you receive, the higher the rate of tax you will be charged.
Click here for a summary of the Fund options available to you on Resignation
With effect from 1 March 2019, legislation requires that all members must have access to retirement benefit counselling before any withdrawal benefit is paid to them or any transfer is made to another fund. This is irrespective of whether you have a personal financial advisor assisting you. The Fund’s administrator will therefore make contact with you to ensure that you understand all the Fund options available to you on your resignation from employment. You may also contact the Fund Services Centre should you require any assistance in this regard.
The claims process on retirement, withdrawal or retrenchment
Details on the claims process to be followed can be found in the “submitting a claim” section of the member guide subject to SAFS