A Moneyweb reader asked: 'I got retrenched in 2019. I am currently a paid-up member of my ex-employer’s pension scheme. I haven’t preserved or cashed my pension as yet. Can I lose my pension during this crazy coronavirus period? What would be better to do – cash or preserve – under the current unusual circumstances?'
A Moneyweb reader asked: ‘I got retrenched in 2019. I am currently a paid-up member of my ex-employer’s pension scheme. I haven’t preserved or cashed my pension as yet. Can I lose my pension during this crazy coronavirus period? What would be better to do – cash or preserve – under the current unusual circumstances?’
However, a defined contribution fund’s liability is only to the extent of the value of the fund’s investments, which are market-linked.While the value of your accumulated pension benefit may be volatile, and a fair bit below its all-time high, it’s not going to be zero. Depending on the value of your pension benefit there is likely to be some tax payable if you cash it in. While on tax, based on current legislation, the investment growth within a pension or preservation pension fund is not subject to tax – whereas a discretionary investment will be subject to some form of tax, be it income, dividend- withholding, or capital gains tax.Personally, I prefer a preservation fund, as opposed to leaving an accumulated benefit with an employer.
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