Introduction
If you are a South African government employee thinking about resigning, there are important questions you need to answer before you hand in your resignation.
This is not only about leaving your job. It is about what happens to your pension, your tax, your medical aid, your monthly income, and the money you may depend on for the rest of your life.
You may already be asking yourself some of these questions.
Should I take my pension in cash? How much tax will I pay? What is an approved fund? How will I get income every month once my salary stops? What happens to my medical aid?
These are not small questions.
In this article, we look at seven basics every government employee should understand before resigning. The goal is not to make the decision for you. The goal is to help you know what to ask before you choose your route.
Why This Decision Matters
A resignation decision can feel simple on the surface.
You resign. Your service ends. Your pension becomes available. But the financial side is often far more serious than that.
The choices you make can affect tax, investment risk, monthly income, medical aid and family protection. If you take too much cash too quickly, the tax can be significant. If you transfer money without understanding the structure, you may be exposed to risks you did not expect.
That is why planning before resignation matters.
You do not want to learn the important lessons after the forms have already been signed. You want to understand the basics while you still have time to compare options, ask questions and prepare properly.
Number 1: Understand Your Pension Options
If you resign from government employment, you generally need to understand two broad pension options.
The first option is to take your money out in cash. This can feel attractive because the money is paid into your bank account. But cash withdrawal can come with a tax cost, and the more pension money involved, the more serious the tax conversation becomes.
The second option is to transfer your money into an approved fund.
An approved fund is a structure that can receive your pension money instead of paying everything directly into your bank account. This may include a preservation fund or a retirement annuity, depending on what is suitable for your situation.
The key point is that taking cash is not the only route.
Before you resign, you should understand what each option means, how it may affect tax, and how it fits into the life you want after government employment.
The decision should not start with excitement about access to money. It should start with understanding what happens next.
Number 2: Know The Tax Before You Decide
Tax can become one of the biggest costs when a government employee resigns.
In the video, Dhevan uses a simple example of a pension value of R5 million. Using the tax table applicable at the time the video was recorded, the tax could be approximately R1.63 million if taken in cash.
That is a serious number.
It shows why tax planning should happen before resignation, not after the money is already being processed. You may have worked for decades to build your pension, and it can be painful to see a large portion disappear because the tax was not planned properly.
This does not mean every government employee will face the same tax amount.
Your own tax position depends on your pension value, service history, previous withdrawals, timing and the rules that apply to your case. That is why a personalised calculation matters.
If you started working before 1998, there may also be an important tax-free benefit that should be calculated carefully.
Before you resign, do not guess your tax. Know the numbers first.
Number 3: Do Not Choose Any Approved Fund
An approved fund can be useful, but choosing one blindly can create problems.
Dhevan explains that an approved fund is simply an investment vehicle approved to receive your pension money. But simply transferring your money into an approved fund is not enough.
You need to understand whether the structure is right for you.
Your approved fund should be considered around your circumstances, your goals, your family, your income needs, your access needs and your risk concerns. That is why the video refers to the idea of a perfect approved fund.
This is not about a generic product.
It is about finding a structure that suits what you need your money to do after resignation. If the fund is not aligned to your situation, you may face unnecessary tax, market risk, access problems, or income pressure later.
You may only get one chance to structure this properly.
Before you transfer your pension, make sure the approved fund is built around your life, not around a generic solution.
Number 4: Plan Your Income After Salary Stops
When you resign, your salary stops.
That sounds obvious, but it is one of the most important parts of the decision. Once the monthly salary is gone, you need to know where your income will come from.
If your pension is transferred into the right structure, part of the money may be used to create income. The transcript explains that after certain cash decisions are made, the remaining amount may need to be invested to provide monthly income.
This is where planning becomes personal.
How much income will you need every month? What debts do you want to settle? How much cash do you need available? How long must the money last? What support does your family need?
Those answers can change the structure of your plan.
It is dangerous to focus only on the lump sum and ignore the monthly income that comes after. A large amount can shrink quickly if spending, tax and debt are not planned properly.
Before you resign, know how your income will work once your salary stops.
Number 5: Finalise Medical Aid Before You Leave
Medical aid is another area that needs attention before resignation.
The transcript explains that, as a general rule, resigning from government employment may affect your current medical aid arrangement. That can be concerning, especially as you get older and medical cover becomes more important.
But losing one arrangement does not mean you must be left without cover.
The important step is to compare available private medical aid options before you resign. You need to understand what cover is available, what it may cost, how it compares to your current cover, and whether it suits your medical needs and budget.
This should not be left until after your resignation is complete.
If you wait too long, you may create unnecessary stress for yourself and your family. The better approach is to know what cover is available and have the replacement plan properly considered before you leave.
Medical aid is not a small side issue.
Before you resign, make sure your medical cover is part of the plan.
Number 6: Check If You Are Financially Ready
Many government employees ask, “When is the best time to resign?”
The answer is not always a specific age or date. In many cases, the better question is whether you are financially ready to leave.
Financial readiness means you understand the major parts of the decision.
You know how much tax may apply. You understand what can potentially be saved legally. You know how your money may be structured. You know how income can be created. You have considered your medical aid. You have thought about debt, cash flow and family needs.
That kind of clarity changes the decision.
Instead of resigning from uncertainty or frustration, you are making the decision from a more informed position. You may still have concerns, but at least you are not guessing about the biggest financial pieces.
The right time to resign is not only about the calendar.
It is about whether your numbers, income, medical aid and pension plan are ready.
Number 7: Follow The Essential Steps
The video closes with seven essential steps every government employee should consider before resigning.
The first is to create a resignation success plan. This should be built around your circumstances, your family, your money and what matters most to you.
The second is to do proper tax planning.
Know how much tax may apply, how much may potentially be saved legally, and whether any pre-1998 benefit needs to be calculated carefully.
The third is to protect your pension capital.
You may have spent 20, 30 or more years building that money. Before you resign, understand what protection options may be available and how market movements could affect your capital.
The fourth is to identify the approved fund that is right for you. The fifth is to finalise your medical aid. The sixth is to build your income and cash flow plan. The seventh is to submit your application early, ideally three to six months before you leave.
These steps are not about making resignation complicated.
They are about making sure nothing important gets missed before the decision is final.
Your Next Step
If you have read this far, you are already doing what many government employees do not do early enough.
You are asking the questions before the decision is final.
That matters because resignation should not begin with a form or a letter. It should begin with a plan that looks at your tax, pension, medical aid, income, family needs and future.
The full video walks through the seven basics in a simple way.
It explains what happens to your pension, why tax planning matters, what approved funds are, how income may be created, what medical aid questions to ask, when resignation may make sense, and which steps should come before your final decision.
No panic. No fluff. Just the truth.
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