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.