Question:
Hi I am resigning from my current employer. We belong to a provident fund scheme. My own contributions are R60 000. Employers contributions are R80 000. Interest R30 000. My new employer belongs to a pension fund scheme. What will be the tax implication if i transfer my existing provident fund to the new employers pension fund. Thanks
Answer:
There will be no tax implications on the transfer to your employer’s pension fund. However, provident fund and pension rules differ when it comes to access to funds at retirement. In a provident fund, you may access 100% of your funds as a lump when you retire (subject to tax), whereas in a pension fund, if the balance exceeds R247 500, you will be required to annuitize a minimum of 2/3 of your retirement benefit.
