Some R80-billion to R100-billion (the difference between how much a retirement fund has in assets and how much it has to pay in liabilities) is due for distribution. Pensioners and former members of retirement funds are first in line for a share if they did not get minimum increases keeping up with inflation. Any remaining money will be shared between all the fund stakeholders, which includes current members and employers.

Get the money you are entitled to
The first step, says Hugh Hacking of Old Mutual Investment Administrators, is ensuring that you get any money you are entitled to.

“Don’t just assume that your former employers or their fund trustees will trace you,” he advises. “If you have left a company since January 1980, contact your previous employer or their pension fund administrators. They should have appointed a former member representative who looks after the interests of former members.”

If you’re not sure whether the fund you belonged to still exists, contact the Financial Services Board’s call centre on 0800 20 20 87 or 0800 11 04 43. Also make sure that you provide your fund with your contact details. You can also monitor the press for adverts on surplus apportionments as, by law, funds have to advertise to previous members for six to nine months.

Review your financial planning
Exactly how the surplus is paid out will be up to the fund trustees, cautions Hacking. But if you do receive a lump sum, this could be a good time to review your personal financial planning and your retirement goals.

If you are already a pensioner you will, hopefully, have accumulated a sizeable capital sum. Your priority now is to provide an income for your retirement years and to ensure that your capital grows accordingly.

Bear in mind that you are totally reliant on this income and your investment strategy should err on the side of caution. If you are able to provide a basic income using only a portion of your capital, you can consider investing the balance in investments that have a higher risk profile.

Provide for income and growth
Your investments should be geared not only towards generating an income, but also towards providing an element of growth. This is necessary because of the effects of inflation over time in reducing the value of your money.

If you haven’t yet retired, keep in mind that you will need between 70 and 85 percent of your current income when you stop working to maintain your current standard of living. In addition, the cost of medical care has risen over the last 10 years; the level of medical attention you require tends to increase as you grow older; you may still have financial commitments; and if you want to travel, or take up an expensive hobby, this will obviously require extra funds.

Hacking advises anyone who’s just received a large sum — whether it’s a surplus pension payout, a good profit on a house sale, a life insurance policy maturing or a divorce settlement — to review their finances carefully.

Financial fresh air
“That windfall can be a breath of financial fresh air, but for too many people, the relaxation is short-lived. Some Lotto winners aren't the only ones to find themselves inexplicably broke a short time after they've raked in enough rands to seemingly keep them flush for life. It's all too easy to fritter away money if you don't have a plan.”

If you've received a lump sum, here are a few general tips on managing it wisely:

Park it provisionally
Lump-sum payouts are often associated with highly emotional events such as a death, a divorce, or being laid off from a job. Consequently, you're probably in no shape to make important financial decisions objectively.

While you can usually spend a small portion of the lump sum on a special purchase or personal treat, most financial advisers recommend stashing the remainder in a safe, easily accessible fund, such as a money-market account or an interest-bearing bank account, for a few months. You won't earn much during that period, but you won't lose a cent either or lock your money into poor investments. You can still tap the account to cover your current expenses and you'll gain valuable emotional breathing space during which you can devise a sound, long-term financial plan.

Ignore inexperienced advisors
Ignore the well-meaning advice of friends and family about how to manage your newfound money. What might work well from their standpoint may be wrong for you. Take the advice of a trustworthy, qualified financial advisor.

The rules governing some types of lump-sum payouts are extremely complicated and could affect your tax situation so you may also need to consult a tax specialist to avoid losing part of the payout in taxes and penalties.

Consider your financial goals
Think about your financial needs and aspirations and how this money helps you meet your goals. Do you need this cash to cover immediate living expenses for yourself and your family? Or is this the nest egg you're counting on to see you through retirement? The answers to these kinds of questions will dictate your best investment moves.

According to Hacket: “Nine out of ten South Africans can’t afford to retire comfortably. You will need assets, and the careful management of a windfall can help you achieve your retirement goals.”