Chapter 6: Personal Investment in South Africa Flashcards

1
Q

The incentives for individuals are:

A
  • Contributions are granted tax relief at the investor’s marginal tax rate
  • Taxable investment income and capital gains within the fund are taxed at a preferred rate. (In the 2007 budget this was set back to zero.)
  • Part of the fund may be taken as a tax-free lump sum on retirement.
  • Life insurance can be provided from contributions to the fund. The death benefits are used to enhance the amounts received by the dependants of a deceased member.
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2
Q

The withdrawing pension fund member can decide to:

A
  • Leave the money in the pension fund (f the pension fund provides for “paid up” membership).
  • Transfer the reserves to a new pension fund.
  • Transfer the withdrawal benefit to a preservation account.
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