The preservation fund option
A preservation fund is a retirement fund designed to warehouse the proceeds from previous pension or provident fund. Given that leaving employees have the option to cash in their retirement fund (which would undo much of the benefit), it is worthwhile encouraging parting employees to preserve their savings in a preservation fund.
A preservation fund preserves the accumulated savings and the attached tax benefits (tax-fee investment returns and lump sum payments); it also permits one (full or partial) withdrawal before retirement.
Learn more about Preservation Funds
More about starting a retirement fund
- Legal structure: umbrella or stand-alone?
- Product: Pension or provident fund?
- Who should be eligible to join? Membership criteria
- How much should you contribute? Contribution rates
- Should you attach risk benefits to the fund?
- Who does what? Service providers
- Governance: Board of Trustees and Principal Officer
- Specifics: Fund rules
- Should you offer investment choice?
- Should you offer a preservation fund option?
The information and answers supplied in this section do not constitute advice as defined by the Financial Advisory and Intermediary Services Act, 37 of 2002.
