Provident fund transfer limitations

Following on from the two year suspension of retirement reforms only relating to the compulsory annuitisation of provident funds to 1 March 2018, the Minister tabled certain interim measures affecting the transfer of amounts out of a provident fund through an urgent Revenue Laws Amendment Bill (Bill).

24 Feb 2016 1 min read Special Edition Tax and Exchange Control Alert Article

Apart from sterilising the compulsory annuitisation upon retirement for two years, it is proposed that any transfer to another retirement fund during the interim period, would result in any future contributions made by the employee, not being exempt from the compulsory annuitisation requirements. This proposal will surely place funds and members of those funds in limbo for two years.

Certain concessions have been made in respect of ‘forced transfers’ upon the closure of a retirement fund. There could, however, be two scenarios to consider – the one being a closure of the fund itself or secondly, where the employer ceases to be an employer. For employees resigning and transferring their accumulated capital to a preservation fund, there would be no effect on the basis that no further contributions would in any event be allowed into that preservation fund.

The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages. Please refer to our full terms and conditions. Copyright © 2023 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us