The Wealth Room


Preservation Funds

What is a preservation fund?

If you have been investing into a Pension or Provident fund through an employer, and have to leave the fund due to whatever reason, and you move to a new employer that doesn’t offer a pension or provident fund for you to transfer your funds to, you will have to then transfer the funds to a Preservation Fund.

A Preservation Fund does exactly what the wording says it does, it allows you to preserve and grow your investment until you reach retirement age, without losing the huge tax benefit that you gained through the pension or provident fund.

The great thing about the preservation fund is that the return on the investment is also not taxed.

preservation fund. www.grantvanzyl.com

How do you Invest in preservation funds

The only way you will have access to a preservation fund is by transferring your pension or provident fund or transferring from another preservation fund.

Once the preservation fund is set up, you may no longer contribute towards the preservation fund.

Depending on the rules of the fund you may have the ability to access up to one third of the fund before your retirement. However be very wary to go down this road, as all withdrawals before retirement, have hefty tax’s levied against the withdrawals, as they want to discourage anybody from touching these funds, so that you have fund for retirement and don’t place a burden on the state.

At retirement you will then have to invest two thirds into a Living Annuity and the other one third you can take as a lump sum. However keep in mind that only a certain portion of the one third lump sum is tax free, the rest will attract tax, so make double sure how much is tax free before you do a full one third withdrawal.

preservation fund. www.grantvanzyl.com

All Video Clips and pictures supplied by Allan Gray



September 3, 2014


Grant van Zyl

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