Once again I read in newspapers, because of the tax incentives, investing in a pension plan is even better than an SSIA. I do not agree with this.
(1) My SSIA matured lately and I got my 25% bonus tax free - no problem.
(2) Co-incidentally I retired at the same time but my AVC (to which i contributed to the max and availed of the tax savings) did not come through as smoothly. Firstly I did not get the 25% tax free lump sum of the AVC because of my personal tax situation. All brochures had stated I would get this - never stated conditions would apply. I was given three options with AVC.
(a) Take the full value in a lump sum which would be taxed , in other words much of the tax relief I had received would be given back.
(b) Take an annuity which would be liable for tax
(c) Switch to an Active Retirement Fund. The interest would be tax free but any withdrawal on the capital would be taxable.
To me stating a pension plan is better than an SSIA is a little misleading
(1) My SSIA matured lately and I got my 25% bonus tax free - no problem.
(2) Co-incidentally I retired at the same time but my AVC (to which i contributed to the max and availed of the tax savings) did not come through as smoothly. Firstly I did not get the 25% tax free lump sum of the AVC because of my personal tax situation. All brochures had stated I would get this - never stated conditions would apply. I was given three options with AVC.
(a) Take the full value in a lump sum which would be taxed , in other words much of the tax relief I had received would be given back.
(b) Take an annuity which would be liable for tax
(c) Switch to an Active Retirement Fund. The interest would be tax free but any withdrawal on the capital would be taxable.
To me stating a pension plan is better than an SSIA is a little misleading