What is the difference between Compulsory and Voluntary money?
Compulsory money is money where you were entitled to claim a tax deduction on the premium – effectively money invested before paying tax. Compulsory money includes Retirement Annuities, Pension and Provident funds and preservation plans. Income tax will be payable on full income from a compulsory annuity. Voluntary money is money which did not yield a tax break, or tax has already been paid on the money. Once tax has been paid on a provident fund withdrawal or the 1/3 cash has been taxed from a retirement annuity or a pension fund, this money also becomes voluntary. Voluntary money can provide a largely tax free income.
