A preservation fund is designed to receive qualifying retirement-fund money when you leave an employer and want to keep that money in the retirement system rather than cashing it out.
Why people use preservation funds
- To keep retirement capital invested.
- To avoid triggering tax simply by receiving a cash withdrawal, where a tax-neutral transfer is available.
- To choose an investment strategy outside the old employer arrangement.
- To maintain a dedicated retirement asset until retirement.
What to compare before transferring
| Area | Questions to ask |
|---|---|
| Costs | What are the advice, administration, platform and investment charges? |
| Investments | What portfolios are available and are they appropriate for the time to retirement? |
| Access | What access is allowed under the current law, fund rules and Two-Pot components? |
| Retirement | What choices will be available when you retire? |
| Beneficiaries | How are death benefits dealt with under retirement-fund law? |
Preservation fund vs retirement annuity
Both are retirement vehicles, but their funding source, access rules and use cases differ. If you are transferring money from an employer fund, compare the legal transfer routes and the product/fund rules rather than choosing solely on investment performance.
Compare preservation fund vs RA
Primary sources used for this guide
SARS — Retirement Lump Sum Benefits
SARS — Two-Pot tax implications
South African Government — Two-Pot retirement system
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