A preservation fund and a retirement annuity can both form part of retirement planning, but they are not interchangeable in every situation.
| Question | Preservation fund | Retirement annuity |
|---|---|---|
| Typical source of money | Transfer of qualifying employer retirement-fund benefits | Personal retirement contributions and, in some circumstances, permitted transfers |
| Ongoing contributions | Usually not used for regular new contributions in the same way as an RA | Designed to accept ongoing personal retirement contributions |
| Access | Depends on fund type, vested rights, Two-Pot rules and preservation-fund rules | Generally retirement-focused access rules, with Two-Pot savings-component access where applicable |
| Best fit | Often considered when preserving an employer-fund exit benefit | Often used for ongoing personal retirement saving |
Do not compare only returns
Two products can hold similar underlying investments and still produce different outcomes because of fees, advice charges, platform costs, access rules and investment construction. Compare the full structure.
Can I split my retirement money?
Whether a particular transfer can be split or directed to different funds depends on the source fund, receiving fund and applicable rules. Get written confirmation before submitting instructions.
SARS — Retirement Lump Sum Benefits
SARS — Two-Pot tax implications
South African Government — Two-Pot retirement system
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