Description

Provided by employers who want to offer retirement benefits to their employees, who become members of the fund.

Provided by employers who want to offer retirement benefits to their employees, who become members of the fund.

For individuals who want to save and invest money for their retirement in a secure and tax-efficient fund. Ideal for members of pension and provident funds who want to add to their existing retirement savings with maximum tax efficiency.

For employees who want to invest their withdrawal benefits from a provident or pension fund in a tax-efficient and secure fund that can provide access to the money before retirement in case of an emergency.

Contractual term

A member can only leave the fund on withdrawal, retirement, death or liquidation of the fund.

A member can only leave the fund on withdrawal, retirement, death or liquidation of the fund.

A member can only leave the fund on retirement (from age 55) or death.

A member can only join the preservation fund on withdrawal from or liquidation of their pension or provident fund. Retirement is allowed from age 55.

Withdrawal

A member can only withdraw when leaving the service of the employer.

Benefits exceeding the tax-free portion are subjection to taxation unless transferred to another approved fund.

A member can only withdraw when leaving the service of the employer.

Benefits exceeding the tax-free portion are subjection to taxation unless transferred to another approved fund.

A member cannot withdraw from the fund.

One emergency withdrawal is allowed before retirement. This can be a partial or full withdrawal, provided the member has left the service of the participating employer and as long as no amount was deducted on transfer into the fund.

Benefits exceeding the tax-free portion are subjection to taxation unless transferred to another approved fund.

Retirement

On retirement, a member can take up to one-third of the retirement benefit as a cash lump sum. The rest must be used to buy an annuity (pension).

Benefits exceeding the tax-free portion are subject to taxation unless transferred to an annuity (pension). Pension income is taxable.

On retirement, the benefit or a portion of the benefit can be used to buy an annuity (pension). Alternatively, a member can take the benefit or a portion thereof as a cash lump sum.

Benefits exceeding the tax-free portion are subject to taxation unless transferred to an annuity (pension). Pension income is taxable.

At retirement (from age 55) a maximum of one-third of the benefit may be taken in cash, subject to taxation. The rest must be used to buy an annuity (pension).

Benefits exceeding the tax-free portion are subject to taxation unless transferred to an annuity (pension). Pension income is taxable.

Preservation provident fund - on retirement, a member can take the entire benefit as a cash lump sum or use the benefit or a portion of it to buy an annuity (pension). The retirement benefit is subject to tax, unless transferred to an annuity.

Preservation pension fund - on retirement, a member can take up to one-third of the retirement benefit as a cash lump sum. The rest must be used to buy an annuity (pension).

Benefits exceeding the tax-free portion are subject to taxation unless transferred to an annuity (pension). Pension income is taxable.

Governance

Governed by the Pension Funds Act and South African Revenue Service (SARS).

Cession

This fund cannot be ceded.

Contributions

Regular contributions are compulsory.

Allows regular contributions or a lump sum transfer – or both.

No contributions are allowed after transfer into the fund.

Member and employer contributions are deductible within certain limits. Member contributions are tax deductible up to 7.5% of annual fund salary. (This means that the contributions are made to your retirement fund before your salary is taxed). If you contribute more than 7.5% of your annual fund salary to a pension fund it will be on a post-tax basis.

Only employer contributions are deductible within certain limits. Member contributions are taken from your salary after tax.

Members can contribute on a tax-deductible basis subject to certain limits. They may contribute up to 15% of non-retirement funding income, or R3 500 less current contributions to a pension fund, or R1 750, whichever is more.

No further contributions are allowed after transfer into the fund.

Beneficiaries

Beneficiaries must be nominated to help trustees decide on the allocation of the death benefit as per Section 37C of the Pension Funds Act.

Participating employer

In the case of an Umbrella Fund, the member’s employer must be, or apply to be, a participating employer of the pension fund.

No employer involvement.

Death

Benefits exceeding the tax-free portion are subject to taxation. If an annuity (pension), then the annuity income becomes taxable in the hands of the beneficiary.

Currently not applicable to retirement funds.