Question:
What is a provident preservation fund?
Answer:
A provident preservation is a type of retirement fund (regulated by the Pension Funds Act) that enables individuals to preserve their retirement savings (and associated tax benefits) on leaving their employer's provident fund. Under present law, investors are allowed one full or partial withdrawal per transfer to a preservation fund (pension or provident) prior to retirement (earliest age 55). A provident preservation may only accept tax-free transfers from a provident or another provident preservation fund. The provident fund holder can take the full amount of the provident fund balance as a cash lump sum at retirement, other than any amounts relating to retirement fund contributions made after 1 March 2015, and the subsequent investment return earned on those contributions (these amounts are subject to two-thirds annuitisation).
