A pension is a fund into which a recurring monthly contribution added during a person’s employment years and from which payments are drawn to support the person’s retirement from work in the form of periodic payments. Taking out a retirement plan can also reduce your monthly tax obligations.
Taking out a retirement plan ensures that you save up for retirement, helping to alleviate sum of the stresses regarding an income at retirement. As from the early retirement age of 55 you will be eligible to take 1/3 of your retirement as a lumpsum cash amount, the other 2/3 is lawfully required to be placed in a lifetime retirement income option to provide you with a continued income at retirement. Take note that a lumpsum of maximum R500,000 is not taxable at retirement.