In times of crisis you may look to your savings or liquidate your investments to tide you over. If this doesn’t yield the financial relief required, you can look to access funds from your home loan, preservation fund or retirement annuities. There are consequences to tapping into each of these so make sure you fully understand any penalties and taxes that may be applied. 

Home loan

Accessing funds from your home loan could be an option if you own a home. Home loan interest rates are lower than personal loan or credit card interest rates as the loan is secured by an immovable asset. It is the cheapest option, credit wise, but this it does come with terms and conditions that may not be suitable for everyone. It is best to speak to your bank to find out how their products work, and consider the long-term effects of accessing a lump sum from your bond.

Preservation Fund 

If you transferred your provident or pension fund benefit from a previous employer into a preservation fund, you are able to access these funds. You have one chance to do so before the age of 55 but this comes with punitive tax consequences because the funds are intended for your retirement years. The first R25 000 can be withdrawn without any tax being paid. Any amount above that will have tax deducted before being paid out to you in line with the below bands. 

Cumulative withdrawal tax table:

Taxable income (R)	Rate of tax (R)
1 – 25 000	0%
25 001 - 660 000	18% of taxable income above 25 000
660 001 - 990 000	114 300 + 27% of taxable income above 660 000
990 001 and above	203 400 + 36% of taxable income above 990 000

When you decide to retire, which is at any age above 55, you are afforded one more chance to withdraw from the preservation fund. If you are invested in a preservation provident fund, you may take the full portion remaining in the fund; whereas with a preservation pension fund, you are limited to withdrawing up to one third of the fund value. At retirement, the tax table is more lenient, as it is applied as follows:

Cumulative retirement tax table:

Taxable income (R)	Rate of tax (R)
1 – 500 000	0% of taxable income
500 001 - 700 000	18% of taxable income above 500 000
700 001 – 1 050 000	36 000 + 27% of taxable income above 700 000
1 050 001 and above	130 500 + 36% of taxable income above 1 050 000

Retirement annuity (RA)

Different rules apply depending on your age and how much your RA is worth.
If you’re below the age of 55 you may only access your RA funds if they are below the amount of R7 000. The withdrawal tax table will apply to the withdrawal.
After age 55, you can cash out the full fund value if it’s less than R247 500. If it’s above this amount, you’re only permitted to withdraw up to one third . The retirement tax table will apply.