June 20th, 2023
The retirement landscape in Botswana has changed significantly with the introduction of the Retirement Funds Act, 2022, which came into effect on 14 October 2022. The amounts which pension fund members can access on resignation, dismissal, retrenchment, and retirement have been revised upwards. The impact of these revisions on the benefit that a member ends up receiving as their monthly pension during their retirement years has become a subject of much debate.
By no means are the revisions referred to above imposed on pension fund members. That is to say, even though you are now entitled to receive the greater of 25% or P25 000 of your total pension benefit as cash (less tax) when you resign, for example, you have the option of encashing an amount that is less than the stipulated amounts or not encashing any amount at all. Not encashing any portion of your pension benefit effectively means that you preserve your entire pension benefit, which would continue to be invested and earn interest over the years until you reach retirement age.