- pension fund pro
- Advance withdrawal to finance residential property
Advance withdrawal to finance residential property
Under the promotion of home ownership scheme (WEF) you can use your pension fund assets to finance the purchase of owner-occupied residential property or to repay outstanding mortgages. According to the law you can use all your vested benefits until you are 50. After the age of 50 the amount of the vested benefits that can be withdrawn in advance to finance residential property is limited to the higher of the vested benefits at the age of 50 or half of the accrued vested benefits on the date of withdrawal. The amount that can be withdrawn in advance is shown in your personal pension certificate. Advance withdrawals may only be made every five years.
Under certain circumstances the promotion of home ownership scheme can be used to optimise your tax situation. For example, you can make an advance withdrawal a few years before retirement to repay your mortgage. If you follow the right procedure, the tax to be levied on the lump-sum payment can be substantially less than if you repay the mortgage when you retire. The objective is to interrupt the tax progression. By planning your Pillar 3a withdrawals so that you can benefit from other tax optimisation options you can save on your taxes.
Application form for a WEF advance withdrawal