What benefits you will receive on resignation

Resignation benefits

If you leave office and take benefits before age 50 (except if you retire early because of ill health), your benefits will be paid to you in the form of a resignation benefit (sometimes called a "withdrawal benefit"). Similarly, even if you are 50 or over when you leave office, you have the right (at any age) to choose to take your benefits in the form of a resignation benefit, instead of a retirement benefit.

This section deals with:

• The benefit you will receive from the Fund if you resign
• The options you have with your resignation benefit

What is the resignation benefit provided by the Fund?

On resignation, you will receive your FUND CREDIT (as explained earlier in this section). The tax treatment of this benefit is dealt with in the section of this site titled “Taxation of Benefits”.  Remember that from September 2024, your Fund Credit is split into three components or "pots" - the Vested Pot, Savings Pot and Retirement Pot.  These are explained on the page called "The design of the fund", and so we will not repeat the explanation here.

What options do I have in respect of my resignation benefit?

You have the following options in respect of the resignation benefit, as from September 2024:

• You can choose to receive up to a specified maximum out of your Fund Credit as a cash lump sum (subject to tax).  In a nutshell, you can take your full Vested Pot in cash, and you can also take your Savings Pot in cash (unless you took a cash withdrawal from your Savings Pot earlier in the same tax year, and the Savings Pot balance when you take the resignation benefit is more than R 2 000) - but you cannot take your Retirement Pot in cash.
• You can preserve your benefit for your later retirement - i.e. transfer your Fund Credit to an approved Preservation Pension Fund, Retirement Annuity Fund, or your new employer’s pension fund.
• You can take part in cash (up to the specified maximum - subject to tax) and transfer the balance to another fund.
• You can choose to leave your Fund Credit in the Political Office-Bearers Pension Fund – in other words you choose to become what is called a “deferred beneficiary” of the Fund, sometimes also called a "paid-up member". (This is also what will happen if you do not give any instructions to the Fund when you leave office - you will become a "deferred beneficiary" automatically.  However, you'll have the above options at any time after you become a paid-up member, or you can take a retirement benefit from the Fund once you reach age 50.)
• You can take part in cash (e.g. your Vested Pot - subject to tax) and leave the balance in the Fund, so that you continue as a "deferred beneficiary" or "paid-up member" as explained above.

Note:  If you have a housing loan (bond) for which the Fund has to honour a guarantee given to the mortgage lender (the bank), the amount owed to the bank and any tax payable on this amount will be deducted from your Fund Credit when you leave office, even if you continue as a deferred beneficiary of the Fund.

The issues to consider in deciding what to do with your resignation benefit are quite complex. The next section deals with these options in more detail.