Withdrawing capital from pension funds
Entrepreneurs wishing to start up a company can withdraw retirement benefits from a pension fund to be used as equity.
When creating a company, withdrawing capital must occur a maximum of one year following the year in which self-employed status was acquired.
The spouses must agree to the early payment in writing.
For younger entrepreneurs, this can be a good way of acquiring equity. However, they should continue to provide for a retirement pension immediately afterwards, as there is no guarantee that the future sale of the company will provide sufficient resources for their retirement.
For this reason, withdrawing capital from the pension fund is not advisable for new entrepreneurs who are older, as despite being able to withdraw considerable equity, they may also compromise their financial stability after retirement.
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Consequences of changing to an SA (corporation)
Directors of a company wishing to change their sole proprietorship into a corporation are not required to pay back funds drawn from their pension fund.