The Star reports that there is a new trend on the rise, namely that of financially desperate people resigning without new jobs lined up so that they can access the money saved in their pension funds.
But, according to Sanlam Business Development manager Sherwin Govender, it seemed logical, given the high unemployment rate, that if one has a job, to try not to lose it. “Nobody knows for sure what the unemployment count will be in 2020 in the context of Covid-19. Many industries will shrink this year. It is likely many companies in those industries will close and thousands of jobs will be lost. These numbers provide a stark reminder that jobs are scarce and finding a new one will not be easy if you lose the one you have,” Govender commented. He went on to remark: “When you resign, you are allowed to cash out the total of the savings accumulated in your employer’s pension fund, but you will pay a large sum in taxes. The tax laws around cashing out your pension fund are in place to dissuade you from doing so.” He added that resigning from a job purely to access a pension came with huge risks and costs. Govender advised instead that it one needed the money to pay debts, other options should be considered first, such as debt counselling or consolidation. Also, financial advice from an accredited financial adviser should be sought. National Treasury has estimated that three million to seven million workers could lose jobs this year, depending on the length of the lockdown and the time that it takes the economy to recover.
- Read the full original of the report in the above regard by Edward West on page 5 of The Star of 10 June 2020
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