The Benefits Of A Pension Loan

Pension Loans

With the current economic climate in South Africa looking more and more grim, it seems as though loans and, in particular, bridging loans in South Africa are becoming increasingly popular. Recent changes in laws around early pension withdrawals have seen a rise in people leveraging their retirement savings to help short-term cash flow problems that they’ve experienced due to retrenchment or early retirement, as well as a host of other reasons including divorce, dismissal, or even resignation.
This trend is most evident in the older population as retirement nears and pension funds may be needed sooner than later. Retirement can be a scary process, and reckoning with your pension is often a very daunting process, too. This is why there are options available to help ease the pressure and put you on the front foot of your retirement. Such options come in the form of pension loans, also known as pension bridging loans.

What Is a Pension Loan?

Pension bridging loans provide you with the opportunity to withdraw funds from your pension or provident fund in advance while you wait for your pay-out. With Pension Bridging, if you’re due to receive your pension fund pay-out within six months then you’re eligible for an early pension pay-out. This means that you can withdraw money against your pension or provident fund in advance and put it to use as and when you need it, without having to wait any longer.

Why Take a Pension Loan?

In todays financial climate it’s become more necessary to receive help via some sort of loan, whether it’s a home loan or a business loan. Pension backed loans are becoming increasingly popular, too, particularly among people who are retiring or who may have been retrenched or dismissed unexpectedly.

One major benefit of taking a loan against your pension is the cash flow injection that it brings to your current financial state, which in turn can turn the tide on any outstanding debt you may have and ultimately reduce your monthly payments.

Another advantage to this is because the loan has your pension as security, there is a greater possibility of leading institutions offering more competitive rates on these loan charges than they would typically offer on student loans or personal loans.

There are great benefits to gaining early access to your pension funds via a bridging loan in the fact that there’s zero risk involved, especially when you go through a provider like Pension Bridging.

There can often be a significant risk of losing your hard-earned retirement funds when working with unregulated institutions that charge unscrupulous amounts of fees and interest. This is not the case here, as loan charges and costs are regulated and governed by the National Credit Act and Financial Services Board, regulations in South Africa.

This Is Your Time

Managing your money and saving for your twilight years has never been easier. If you’ve not begun thinking about your future after work, this is your time to start.

FAQ: Do I Qualify For A Pension Bridging Loan?

Pension Loans

Retirement, Dismissal, Resignation, Death or Divorce are traumatic events in a working persons life, but on the positive side, the lucky ones who have had a company pension or provident savings scheme, are able to make their policy paid up and they can draw down a portion of their funds.

That is the good news. The bad news is that it can take months to get the pension funds from the pension administrators. The reasons for these delays are varied and very frustrating for the individual. In most cases
large corporate companies with call-centres that have very little incentive to process claims fast. This leaves the ex-employee, perhaps only drawing minimum benefit from UIF and now unable to meet their financial obligations.

The Solution
Private pension lenders have recognized this problem and are able to advance pension cash to persons that have given notice to their pension fund, that they require their money to be paid out.

These Pension Bridging companies give pension loans from as little as R3000 up to R50 000 and even more in some circumstances. These funds are made available within 48 Hours of all the paperwork being completed. Yes, you hear right – 48 hours to get your pension payout!

Repayment
Once the provident or pension fund pays out the investment funds, the provident loan or pension loan plus interest and fees is paid back to the lender and the balance is paid to the fund member.

Cost
Provident Bridging loans and Pension Bridging loans, landing rates are governed by the NCA (National Credit Act). Private lending companies are obliged to comply with the NCA or risk having their licences withdrawn. Rates charged for these provident loans are fair considering the risk the lender takes.

Security
Pension bridging does not require any type of security. It is essentially an unsecured personal loan.

Risk
There is no risk to the borrower. There is a cost because the pension lender or provident lender charges interest and an administration fee. The borrower does not have worry about their pension money being stolen. The reason that the risk is low, is that the pension and provident money is paid directly into the members bank account, not to the lender.

Credit Bureau Listing
People often ask if they can get a pension loan if they have a poor credit profile. The good news is,
yes they can. This financial solution is designed to assist those in financial difficulty.

Provident Fund Loans and Pension Loans are a useful way for people that have funds saved to access some of their savings to assist them during difficult financial times.