The Senate has finally adopted the Review of Lump-Sum Payments Act after many years of delay. This means that people will have the option to withdraw a maximum of 10 percent of their pension in one lump sum upon retirement. This will be possible from 1 January 2029.
What does a lump sum mean for my pension?
If you opt for a lump sum payment after 1 January 2029, your retirement pension will be lower, and you will no longer be able to make use of the 'high/low' scheme.
What should you consider when opting for a lump sum payment?
If you opt for a lump sum payment, you will have a higher income in that year. You may pay a higher tax rate on this. That higher income could affect your allowances and other benefits that depend on your income. Whether you receive less allowance depends on the amount and your situation.
