Page 23 - Waterfall Issue 9 2021

RETREnCHEd?

Where to from here?

By Marguerite Marais CFP®, Technical Legal Adviser, PSG Wealth

u nfortunately, given the The amount received as Normal

Income typically includes your last
turbulent times we live in,
retrenchment has become
a reality for many. While salary, notice pay, leave pay etc.
Your Severance Benefit is a lump sum
it’s often unexpected, is there paid to you by your employer. The Basic
a way to rebound from such a Conditions of Employment Act gives
traumatic and disruptive event? guidance on what one should receive,
which is a minimum of one week’s
Once the initial shock of being remuneration for every completed
retrenched is over, it is essential to year of service. Your severance
reassess your situation and take benefit can only be taken as a lump
proactive steps to get things back on sum and will be taxed according
track. This is something one should to the retirement lump sum tables,
not do alone, as emotions can cloud together with all previous retirement
your judgement. The valuable input fund lump-sum benefits received.
from an objective third party can give
you practical guidance and help you Your Retirement Fund Benefit is the
regain control of your situation. actual fund value of your pension
Marguerite Marais or provident fund. At retrenchment,
understanding your you have different options of what
retrenchment package It is important to consider you can do with your retirement
When you are retrenched, the first not just your immediate fund benefits, including:
step will be to understand your • Accessing the funds by taking the
retrenchment package and the various circumstances but also full benefit as a cash lump sum;
monetary amounts that you will your long-term plans • Transferring the full benefit to a
receive or have access to. These are qualifying retirement fund;
usually made up of the following: • Taking a portion of the benefit
• Normal Income as a lump sum and transferring
• Severance Benefits the balance to a qualifying
• Retirement Fund Benefits retirement fund (if the rules
of the fund permit this).

iSTOCK: OLGA SHuMITSKAYA Waterfall Issue 9 2021 21