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GEPF employee: Do I retire or resign?

I am due to retire from the GEPF in three years’ time at 65. Which would be the best: to retire, or resign and invest my lump sum in forex and offshore?

Vick Lallbahadur - Masthead Financial Planning

Firstly, it is difficult to provide wholistic, comprehensive advice without all the necessary information, but I will provide generalist information to guide you. Please do remember to consult a financial planner of your choice, who can provide more detailed advice with more detailed information.

It is important to note that the Government Employees Pension Fund (GEPF) makes all decisions based on formulas and not conventional systems as independent financial service providers do.

With regards to retirement verses resignation – should you retire from employment currently, you will receive your pension funds (subject to GEPF formulas). You will still receive your first R500 000 portion taxed at 0% and the remaining funds must be used to purchase either a GEPF annuity or independent annuity.

If you resign at 65 as planned, you will have gained more funds within your pension fund due to contributions, interest earned per annum, time within the fund and time employed.

Investing in forex and offshore investments could yield results, but these investments are very high risk and could also mean high losses.

Usually at retirement age, it is advisable to lean towards more conservative investments, as these are less likely to perform badly. Conservative investments also mean you are more cautious with the funds you’ve earned over your career as it is possible you may not have the opportunity to recover these funds if losses occur within high-risk investments. 

Do you have any questions you would like answered by registered financial planners?

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Giving advice in a public forum is always a tricky thing to do as there is always the chance you miss something or leave something out. The GEPF is more complicated than it first appears.
At 62 there is a good chance that the member has vested benefits in respect of service up until 1 March 1998. This will change the nature and tax consequences of this benefits. It is possible to get a quote online from the GRPF providing details of what is payable and what is taxable in both options This should be his first port of call.

End of comments.

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