ANNUITISATION CHANGES FROM 1 MARCH 2021
From 1 March 2021 provident funds work like pension funds, i.e. at retirement only one- third can be taken as a cash lump sum and two-thirds must be used to buy a pension for life. To protect members’ vested rights all members will from 1 March 2021 have two “pots” of money in a Fund. A vested “pot” and a non-vested “pot”.
What is the difference between a vested “pot” and a non-vested “pot”?
The vested “pot” of money is the member’s current fund savings as at 1 March 2021 plus growth on the money until the member retires. At retirement this pot can be taken as a cash lump sum.
The non-vested “pot” of money is all the new contributions from 1 March 2021 up until the member retires plus growth. At retirement the member can only take one-third of this money as a cash lump sum and two-thirds must be used to buy a pension (compulsory/guaranteed/life annuity).
If the non-vested “pot” is less than R247 500 (the de minimis) this may be taken as a cash lump sum.
The Fund offers Retirement Benefit Counselling to help you understand your options at retirement.