|Withdrawal Amount||Rates of tax|
|R0 – R22 500||0%|
|R22 501 – R600 000||18% of the amount over R22 500|
|R600 001 – R900 000||R103 950 plus 27% of the amount over R600 000|
|Over R900 000||R184 950 plus 36% of the amount over R600 000|
Please note: The withdrawal benefit tax table is applied on a cumulative basis. This means that if you take cash when you withdraw from Employer A, and then you take cash again when you leave Employer B in a future year, your previous withdrawal will be taken into account when calculating the tax payable.
That means that only the first R 22 500 of your first withdrawal benefit from a Pension or Provident Fund will be taxed at 0%.
The Pension Funds Act No. 24 of 1956 prescribes that all Members that have reached, or are over, the Fund’s retirement age, which is 65 years in the MCPF, must retire from the Fund and may not withdraw their fund credit . The Pension Funds Act states that at retirement you only qualify for the full cash lump sum if you are a Member of a Provident fund (not a Pension Fund), you emigrate, or the total value of your fund credit is below R50 000.
This means that if you are a Member who has reached, or is over the age of 65 years, and you want to claim your retirement savings on exiting from the Pension Fund you may only take a maximum of 1/3 of your total fund credit value in the MCPF as a cash lumpsum if your fund credit value if more than R 50 000. The cash lumpsum will be taxed based on the tax table shown below:
|Retirement Cash Amount||Rates of tax|
|R0 – R315 000||0%|
|R315 001 – R630 000||18% of the amount over R315 000|
|R630 001 – R945 000||R56 700 plus 27% of the amount over R630 000|
|R945 001 and above||R141 750 plus 36% of the amount over R945 000|
The remaining 2/3 of your total fund credit value must be used to purchase a pension either via a retirement annuity or a living annuity. In summary, the Pension Funds Act No. 24 of 1956 does not permit any Pension Fund in South Africa to pay an exiting Member, who has reached or is over the Fund’s retirement age, a withdrawal benefit consisting of a cash lumpsum of 100% of their fund credit value unless the Member’s fund credit is below R 50 000 or the Member is formally emigrate.
The Fund’s previous death cover for Councillors, which was 3 times annual pensionable salary for Councillors over the age of 65 years and 5 times annual pensionable salary for Councillors under the age of 65 years, was subsidised by the Fund’s risk reserve for a substantial period of time. In 2011, the Fund’s risk reserve was depleted and the Board of Trustees at the time had to make a decision regarding the affordability of the Fund’s death cover for Councillors.
The Board of Trustees at the time made the decision to reduce the Fund’s death cover to 1 times annual pensionable for Councillors over the age of 65 years and 3 times annual pensionable for Councillors under the age of 65 years based on the cost of the death cover.
Yes, the Board of Trustees reviewed the level of the Fund’s death cover for Councillors at the Fund’s strategy session in May 2013 and the implementation of the revising of the rules in this regard is work in progress.
Your funeral benefit claim will be paid out within 48 hours of submission if you have submitted certified copies of the following documentation with your claim: