I’m under debt review. Can I withdraw cash from my pension to buy a house?

The only time you may access these funds is if you leave your employer.

I am 47 years old, renting a house and I’m currently under debt review. I am only contributing to my employer’s provident fund. I want to know whether a partial withdrawal of funds is possible? I need the funds to purchase or construct a house.

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Thank you for your question about whether you can access your pension or provident funds when you are undergoing debt review.

Unfortunately, while you are still employed by your employer, the legislation does not permit you to access the funds in your pension or provident fund. The only time you may access these funds is if you leave your employer. If you resign or are retrenched from your employment, you will be able to access any money invested in your pension or provident fund.

In the event of resignation or retrenchment, you have the option to make a full cash withdrawal from your retirement funds, bearing in mind that the funds will be taxed as per the withdrawal benefit table which is higher tax rate than on retirement. If you choose not to withdraw your retirement funds on retrenchment or resignation, you may elect to move your money into a preservation fund or transfer the capital into a retirement annuity thereby preserving your money for your retirement years.

In the event of retirement or retrenchment, any withdrawals made from your retirement funds will be taxed as per the withdrawal tax table below:

Withdrawal tax table 

Taxable income (R)​ Rate of tax (R)​
1 – 25 000​ ​0%
​25 001 – 660 000 ​18% of taxable income above 25 000
​660 001 – 990 000 ​114 300 + 27% of taxable income above 660 000
​990 001 and above ​​203 400 + 36% of taxable income above 990 000

As the legislation currently stands, once you retire from a provident fund, you may access the full lump sum amount subject to tax as per the retirement benefit tax table. With effect from March 1, 2021, when retiring from a provident fund, the proceeds from the fund will be subject to annuitisation where you will be required to use two-thirds of the proceeds to purchase either a living annuity or a life annuity, which would, in turn, provide an annuity income. The tax table that the retirement lump sum benefit is taxed is below.

Retirement tax table 

Taxable income (R) ​Rate of tax (R)
1 – 500 000​ ​0% of taxable income​
​500 001 – 700 000​ ​18% of taxable income above 500 000
700 001 – 1 050 000​ ​​36 000 + 27% of taxable income above 700 000
​1 050 001 and above ​130 500 + 36% of taxable income above 1 050 000

Bear in mind that while you are under debt review you may not incur any new debt as the process is aimed at becoming debt-free. This is a beneficial process that aims to educate consumers about debt and how to manage debt in the future. Once you are out of debt review, you should become eligible to take on new debt, after which you may apply for a mortgage to purchase a home.

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If it was possible to do it, then you’d have to make sure you’d have sufficient funding post retirement….like inheriting wealthy, or live with your kids


Otherwise, bad move. It’s called a “retirement” fund for good reason, and not a “housing development fund”.

Spending tomorrow’s money on things you want today is never smart….you will only spend your dying days in destitution and penury!

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