Types of Pension Funds in SA today
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Pension Funds
Provident Funds
Retirement Annuity Funds
Preservation Funds
Pension Fund v Provident Fund
Retirement Annuity v Preservation Fund
Employee
Contribution |
Employer
Contribution |
Frequency
of Contribution Eligibility
Criteria Withdrawal
Benefit Retirement
Benefit Board of Management | |||||
| Pension Fund |
Tax deductible up to specified limit determined by SARS | Tax deductible up to specified limit determined by SARS | Monthly | If employer a participating employer in the fund then obligatory to join fund | Payable in terms of rules but subject to minimum early with-drawl benefit (s 14A of Act) | Up to 1/3 in cash and balance in the form of pension | Members have the right to elect at least 50 % of the board |
| Provident Fund |
Not tax deductible | Tax deductible up to specified limit deter- mined by SARS | Monthly | If employer a participating employer in the find then obligatory to join | Payable in terms of rules but subject to minimum early withdrawal (s 14A of the Act) | Entire benefit may be taken in cash | Members have the right to elect at least 50 % of the board |
Retirement Annuity |
Member’s contributions – tax deductible up to specified limit determined by SARS |
N/A | Monthly or Annually or after interval as agreed between the parties | Any natural person below the age of 70 may apply to become a member | No withdrawal benefit |
Up to 1/3 in cash and balance in the form of a pension |
Members do not elect the board. The trustees are usually representatives of administering insurer of asset manager (some rules allow for independent trustee/s) |
| Preservation Fund | N/A – Tax tree transfer of withdrawal benefit from pension or provident fund | N/A – Tax tree transfer of withdrawal benefit from pension or provident fund | Once – off transfer of withdrawal benefit (no further contributions permitted | Only recipients of withdrawal benefits from pension or provident funds may join | Single cash withdrawal permitted subject to conditions outlined in fund rules | If preservation pension fund – 1/3 cash plus annuity or if preservation provident fund – cash benefit | Members do not elect the board. The trustees are usually representatives of administering insured or asset manager (some rules allow for independent trustee/s) |
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