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Definition

A fund which an employee contributes to during his/her working life and which is paid out, tax free, on retirement or in the event of the contributor's death, provided the contributions were paid out of after-tax income. On retirement the pension can be used to purchase an income or be paid out as a lump sum (known as a "commutation") or a combination of both - depending on the rules of the pension fund. Contributions to pension funds are often compulsory. Contributions to the pension fund are pooled and then invested by fund managers. Generally, the returns on these investments are not very good, with many of them under-performing the JSE overall index.

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