Provident fund transfer limitations

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.