The primary difference is that if a pension fund member retires, the member gets one 1/3 of the overall gain in a cash lump sum and the alternative two-thirds is paid out in the form of a pension over the relaxation of the member's life. A provident fund member can get the full benefit paid in a coins lump sum.
There are advantages and drawbacks to getting all of your benefits in a lump sum. One downside is that you may spend a lump sum in no time. Then there might be not anything left as pension for the relaxation of your existence . Then you may need to apply for a country pension. but if you make investments the lump sum wisely you have to now not have this hassle.
a bonus of having a lump sum payment is which you avoid all of the problems in getting a private pension every month. insurance agencies and different pension finances pays a private pension right into a financial institution account if you have one, or else ship a cheque to your home address, or for your antique organization who will then bypass on the fee. but if you have no bank account or live in a place in which the postal device could be very unreliable, you might have amazing issue receiving and cashing your pension cheque each month. A lump sum will help to keep away from some of these issues.
for workers who aren't properly paid, the quantity of a monthly pension can be so small that it offers them no security anyway. human beings additionally sometimes feel suspicious approximately leaving their money with pension fund groups once they retire. They might alternatively have the cash to look after themselves. someone who gets a lump sum may be able to put this towards shopping for a house or plot of land, while someone retiring to a rural vicinity may additionally use it to shop for cows, goats, and so on.
The provident fund is typically extra bendy than the pension fund. part of the lump sum may be used to shop for a private pension thru a private pension employer. the main gain of a pension fund is that it's far paid for life. The pension may be paid out till you die. This gives you security because a positive amount of money will be coming in every month. in case you are not disciplined to deal with a large amount of money, then it is higher to get the cash paid out in small quantities every month.
Hofland Financial advisors deem pension fund as the best retirement solutions for the average middle class South African. For More information, Give us a call on 27 12 3471801