TCS+ | The retirement decision most South Africans get wrong
About this episode
The episode discusses the critical financial decision South Africans face regarding their retirement savings when leaving an employer.
What happens to your retirement savings when you leave an employer is one of the most consequential financial decisions most South Africans will make – and one of the most commonly mishandled. In this podcast conversation with Mpho Chitapi, 10X Investments senior investment consultant Michael Rossouw sets out what should happen, what often does, and where the costs lie. When an employee resigns, their pension or provident fund does not automatically follow them. Money is frequently left behind in an old employer fund by default, or withdrawn in cash during the transition. The cash option is the most damaging. Rossouw cautions against it not because the money is needed less in the short term, but because removing capital interrupts compounding in a way that is extremely difficult to recover from later, even on higher future earnings. A point Rossouw made bluntly is worth restating, because it is widely misunderstood: under the Pension Funds Act, individuals do not own pension or provident funds. Only a company can establish one, and employees are members of an employer-sponsored fund rather than owners of it. When the employment ends, the relationship with the fund changes, too…
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