Retirement Benefits

Your retirement benefits will be dependent on which part of the Fund you belong to:

Normal Retirement Age

The normal retirement age is determined by your School and is specified in the special rules of the School.

Early Retirement

With your employer's agreement, you may retire early at any age within ten years of your normal retirement date. 

Later Retirement

With your employer's consent, you may retire after the normal retirement age.

 

Part I: Defined Benefit Pension Fund

If you belong to the Defined Benefit section, (Part I) of the Fund, your total retirement savings is calculated by the Actuary using a formula. 

 

Part II: Defined Contribution Pension Fund

If you belong to the Defined Contribution section (Part II) of the Fund, your total retirement savings is made up from the following pots:

Vested pot: “OLD” savings up to 31 August 2024	Savings pot: “EMERGENCY” money – only for emergencies!	Retirement pot: NO TOUCHING
You may withdraw a portion in cash.	You may withdraw the full balance in cash.	This money must be used to purchase an annuity when you retire, unless the amount is less than R165 000, in which case you can take everything in cash.
This benefit will be taxed in line with the tax table for retirement.	This benefit will be taxed in line with the tax table for retirement.	The annuity that you buy will be taxed as and when you receive your monthly pension income, in line with the tax tables for retirees.

Let’s look closer at both.

 

Part I: Defined Benefit Pension Fund:

Normal retirement

You will receive an annual pension equal to 2% of your final average salary (FAS) for every year of pensionable service.

For example, if you have 20 years of service, your pension will be calculated as 2% x 20 x Final Average Salary. FAS is determined based on your salary over the last 1 or 2 years, as selected by the School.

Example:  Lindiwe’s Final Average Salary is R150 000 per year.  She belonged to the Fund for 30 years. The pension that she will receive from the Fund per year will be calculated as follows: = 2% x 30 years x R150 000 per year = 60% x R150 000 per year = R90 000 per year = R7 500 per month

 

Early Retirement

You will receive your pension as described above, but it will be reduced by 0.25% for each completed month between early and normal retirement.

Late Retirement

You will receive your pension as described above, but it will be increased by 0.4% for each completed month between normal and late retirement

 

 

Part II: Defined Contribution Pension Fund:

Normal retirement

Your total retirement savings is your Accumulated Credit.

Early Retirement

Your total retirement savings is your Accumulated Credit, but remember you are missing out on years of contributions and your retirement savings will have to last you much longer.  

Late Retirement

Your total retirement savings is your Accumulated Credit.

 

Part I: Defined Benefit Pension Fund

·    You may elect to take up to one-third of the total value of your pension as a cash lump sum, with the remaining two-thirds used to pay you a pension from the ISASA Retirement Fund. Lump sum benefits taken in cash are taxed.

·        If your accumulated credit is less than R247,500, you may take the full amount as a cash lump sum.

·        Retirement benefits counselling is provided at least three months prior to your normal retirement age.

·       You may elect to resign instead of taking early retirement and transfer your accumulated credit to a preservation Fund, but you will pay much more tax.

·        The Fund allows members to defer their retirement, leaving their accumulated credit invested within the Fund.

 

Part II: Defined Contribution Pension Fund

·      You may elect to take a portion of the total value of your Vested Pot as well as your entire Savings Pot as a cash lump sum. Lump sum benefits taken in cash are taxed at the retirement tax tables.  

·        You must use the entire Retirement Pot to purchase an annuity. If your accumulated credit in your Retirement Pot is less than R165 000, you may take the full amount as a cash lump sum.

·       The Fund offers a life and living annuity option, and members will receive quotations for both when they are five years from retirement.

·        Retirement benefits counselling is provided at least three months prior to your normal retirement age.

·       You may elect to resign instead of taking early retirement and transfer your accumulated credit to a preservation Fund, but you will pay much more tax.

·        The Fund allows members to defer their retirement, leaving their accumulated credit invested within the Fund.

Always speak to a financial planner before making any decisions on what to do at retirement.

Click on the image below to view the Retirement Fact Sheet