What is a Preservation Fund?

A Preservation Fund is a retirement savings account that allows you to transfer pension or provident fund benefits when you leave an employer. Instead of withdrawing your savings and facing high tax penalties, you can keep your money invested until retirement.

Why Keep Savings in a Preservation?

• Avoids high tax penalties from early withdrawals.
• Ensures your money continues to grow with investment returns.
• Provides financial security when you retire.
• Helps you stay disciplined by preventing unnecessary withdrawals.

A Preservation Fund is a smart choice for keeping your retirement savings intact while offering limited flexibility for emergencies.

What Happens If I Leave South Africa?

If you emigrate and become a non-resident, you may apply to withdraw your full Preservation Fund (subject to tax) after formalizing your tax status with SARS.

By understanding your Preservation Fund options, you can make informed decisions that support your long-term financial security.

What are the Benefits of a Preservation?

• Tax-efficient – avoids penalties that come with early withdrawals
• Investment growth – your money remains invested and benefits from compounding
• Limited flexibility – allows one withdrawal before retirement if needed
• Retirement security – prevents impulsive spending and ensures you have funds when you stop working

Can I Convert My Preservation Fund to a Living Annuity?

Yes, upon retirement, you can transfer your Preservation Fund into a Living Annuity, which provides flexible income withdrawals while keeping your money invested.

What Are the Risks of a Preservation Fund?

• Market fluctuations can impact investment returns
• Limited liquidity, with only one withdrawal allowed before retirement
• Inflation risk, requiring a well-balanced investment strategy

Is a Preservation Fund Better Than a Retirement Annuity?

Both have their benefits:

• Preservation Fund allows one withdrawal before retirement
• Retirement Annuity allows tax-deductible contributions
• Both grow tax-free until withdrawal

Can I Invest My Preservation Fund Offshore?

Yes, depending on your provider, you can allocate a portion of your Preservation Fund to offshore investments, gaining access to global markets and currency diversification.

How Much Can I Withdraw From My Preservation Fund?

If you choose to withdraw before retirement, you can take any amount (partial or full), but it will be subject to withdrawal tax.

How Can I Withdraw Money From a Preservation Fund?

• One withdrawal before retirement (partial or full)
• Retirement withdrawal, where one-third can be taken as a lump sum
• The remaining balance must be used to purchase an annuity

What Happens to My Preservation Fund if I Die?

Your Preservation Fund will be distributed to your beneficiaries, either as a lump sum or transferred to a retirement income product.

Can I Take a Loan From My Preservation Fund?

No, you cannot borrow against a Preservation Fund, as it is meant solely for retirement savings.

How Does Tax Work on a Preservation Fund?

• No tax on growth while invested
• Tax on withdrawals, based on South African tax tables
• Retirement lump sum tax, with exemptions up to certain thresholds

Can I Make Additional Contributions to My Preservation Fund?

No, once your savings are transferred from a pension or provident fund, you cannot make additional contributions to a Preservation Fund. However, you can start a Retirement Annuity for additional savings.

What Investment Options Are Available in a Preservation Fund?

Your Preservation Fund can be invested in a range of asset classes, such as:

• Equities (stocks) for long-term growth
• Bonds for stability and fixed returns
• Cash & Money Market for low-risk liquidity
• Offshore Investments for diversification

Can I Move My Preservation Fund to Another Provider?

Yes, you can transfer your Preservation Fund to another approved provider without tax penalties, ensuring you have the best investment management and fee structure.

What Happens If I Leave My Preservation Fund Until Retirement?

If you don’t withdraw early, your savings continue to grow tax-free until retirement. At retirement, you can take one-third as a lump sum (subject to tax) and the rest must be used to purchase a retirement annuity or pension income.

Can I Access My Preservation Fund Before Retirement?

A Preservation Fund is designed for long-term retirement savings, but you are allowed one withdrawal before retirement. This can be a partial or full withdrawal, subject to tax.

What happens at Retirement with my Pres Fund?

• You can access your funds, but withdrawal rules depend on the type of preservation fund.
• A Pension Preservation Fund requires you to purchase an annuity to provide an income.
• A Provident Preservation Fund may allow a full lump sum withdrawal, depending on legislation at that time.

Can I Transfer my Preservation Fund to Another Investment?

Yes, you can transfer your preservation fund to another Preservation Fund, Retirement Annuity, or Employer Pension Fund, provided it follows the retirement savings rules.

What Happens to my Preservation Fund if I Die?

• Your beneficiaries will receive the money, subject to retirement fund laws and distribution by trustees.
• The payout could be a lump sum or follow annuity rules, depending on the fund type.

Can I take a Loan from my Preservation Fund?

No, a Preservation Fund cannot be used as collateral and does not allow loans. The funds are meant strictly for retirement savings.

How Many Times can I Withdraw from a Preservation Fund?

Only once before retirement. After that, your savings remain untouched until retirement.

Can I Withdraw my Entire Preservation Fund?

• Yes, but only if you have not already used your one-time withdrawal.
• If you withdraw everything, you may face significant tax penalties.

What happens if I don’t withdraw anything before retirement?

Your funds stay fully invested and can be accessed at retirement. Depending on the type of fund:

• A Preservation Pension Fund requires you to buy an annuity, which provides a monthly income.
• A Preservation Provident Fund may allow a lump sum withdrawal at retirement, depending on legislation at the time.

How Much can I Withdraw from my Preservation Fund?

• You can withdraw any amount, but only once.
• After this, the rest of your savings must remain until retirement.

Can I Withdraw Money from a Preservation Fund?

Yes, but only once before retirement. If you choose to withdraw a portion, the remaining balance stays locked in until you retire.