Retirement Funds are one of the best ways to save for your future, but what happens when you leave your Fund? Here’s some helpful information to keep you informed about your options.

Some companies offer their employees either a Provident or Pension fund scheme as part of their employment package. There are still many companies that do not offer this benefit. Of the employees that do benefit from a company fund, this is often their only source of retirement funding which is not ideal. It is important to supplement your retirement funding on your own accord, either by making additional contributions to your company fund or through a personal Retirement Annuity. There are of course other options which I will not be touching on in this article.

Employees who leave their employer, either through resignation or dismissal, need to be aware of the following if they are under the age of 55.

Resignation or Dismissal

When resigning from your employer you have several options available to you:

1.Withdraw the funds in full

This is not a recommended option. Remember that these funds are meant for your retirement, so if you withdraw now, what will happen when it’s time to retire?

You will also be taxed on the withdrawal. The first R25 000 will be tax-free but the remaining fund is taxed according to the regulations displayed in the SARS tax table below:

This R25 000 tax-free amount only occurs once in a lifetime, should you resign and withdraw from another company you will not receive this benefit again.

2. Preserve funds in a Pension or Provident Preserver

Should you choose to transfer your funds to a Pension or Provident Preserver there will be no Tax implications. The portfolio you choose to invest in or construct needs to comply with Regulation 28. This means the maximum of your funds are split into 75% in Equities, 25% Property, 25% Offshore.

You also have the option of making a one-time withdrawal from the Preserver Fund of up to 100% or less of the fund value. Once again, should you choose to do this you will be Taxed as per the table above.

3. Transfer into your new company’s fund

If you find employment with a new company which has fund in place, you may have the option of transferring your funds into the new company fund Tax-Free – depending on the rules of the fund.

4. Retirement Annuity

The last option is transferring your funds into a Retirement Annuity Tax-Free. Once again, the Retirement Annuity will need to comply with Regulation 28. However, should you choose this option you will not be allowed your one-time withdraw as with the Preservation option.

When making this decision it is best to speak with a qualified Financial Advisor who will be able to guide you through the process. When making a decision regarding your fund, always remember to ask what fees you will be charged as this will have an impact in the long run on your investment.

It is always best to Preserve your retirement funds to help fund the future you!


By Mike Kidwell, Prism Employee Benefits – Durban Branch

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