Nedgroup Investments : guard against early withdrawals from retirement funding

Far too many South Africans grow old with absolutely no provision for retirement. Our government has become increasingly serious about encouraging people to save for old age by providing tax benefits to those who do save and rather harsh penalties to those who try to access the money early. Oneof these penalties is levied via the taxation of lumpsum benefits taken prematurely from a retirement fund whereby the penalty is actually quite onerous and means that you forfeit taking a very valuable and quite large tax free lumpsum when you do retire. Some of the other unintended consequences of dipping into your retirement funding is also a loss of capital growth and the power of compounding and all those good things that come to patient investors. The bottom line from Denver Keswell, senior legaladvisor at Nedgroup Investments is to try and avoid touching your retirement fund prior to retirement. - Candice Paine