Seek good advice on payouts

16 August 2018 - 11:18
By owen s nkomo AND Owen S Nkomo
Loss of income while waiting for retirement payout can be detrimental.
Image: 123RF / Sean Prior Loss of income while waiting for retirement payout can be detrimental.

The time it takes to get a payout by a retirement fund or for a claim to be processed is a major problem. As a result many members find themselves in debt and end up cancelling funeral or life policies because of a lack of funds.

Most people going on retirement are disappointed when the excitement of staying at home and managing their own time is suddenly dashed by the loss of immediate income.

This is due to the failure to plan ahead in regard to the timing of the submission of your retirement or resignation documentation to your employer.

Financial advisers have helped hundreds of retirees and employees who have resigned because they have experience when it comes to the processes that must be followed in order to avoid delays in payments by any pension fund, especially government funds which are generally more of an administration challenge.

The following are the most common reasons delays in payments are encountered:

 • Failing to submit your notice of resignation or retirement on time. It is preferable to officially resign or retire three months ahead of your desired last date of employment.

• Failing to correctly complete all the relevant documents for the withdrawal of benefits or transfer to a post-retirement income product, or in case of resignation to preservation fund.

• The documents must be accurately completed to avoid going back and forth between administrators. This is usually a big concern for most Government Employees Pension Fund and some parastatal fund members who invariably have to wait longer than their private sector counterparts for benefits.

• Failing to get appropriate advice on the options you have after your current employment ends. Some people change their minds in the middle of the process once they realise that their initial choice will, for example, cost them a lot of tax.

• This usually means they have to restart the whole process, adding another two months to the waiting period. It is best to get full advice on all your options before you make a choice that suits you best.

• A lack of access to communication tools such as e-mails, the internet, a functional postal address or services means that communication is inconsistent and corrections recommended by administrators don't get implemented timeously, resulting in delays in the system.

∗ Nkomo is CEO of Inkunzi Wealth Group