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Types of Pension Funds in SA today


  • 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
Fund

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)

Disclaimer: Please note that the content above is for general information purposes only and is not indented to be legal and/or financial advice. Information contained herein should not be acted upon without further consultation with your professional legal and/or financial adviser.

Click here for advice on Retirement Annuities
Click here for advice on Preservation Funds
Click here for advice on Provident Funds


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