In today’s climate, changing jobs to accelerate your career is a commonplace occurrence. Almost nobody stays with the same company all the way through until retirement. But that doesn’t mean you shouldn’t enjoy the same retirement benefits as the loyal company men and women. Take a look at how preservation funds can ensure this is the case.
What Are Preservation Funds?
Preservation funds are a simple but powerful retirement planning tool. If you have an existing pension fund or provident fund agreement with a company, and decide to leave the company (and thus exit the fund), you can transfer all of your savings from the fund into a preservation fund, without being taxed on the transfer. Your investment will continue to grow as before, despite you having severed ties with your employers, and will be made available upon retirement.
Preservation funds give you the freedom to have a dynamic, unconstrained career, free from concern about your future financial wellbeing being penalised as a result.
The Benefits of Preservation Funds
Preserve all the benefits of a given fund
Escape the tax implications of exiting a pension or provident fund without transfer
Enjoy career freedom; transferring from one company’s retirement fund to another requires immediate employment, with no room for self-employment
Depending on the terms of the fund, you may be able to withdraw a lump sum prior to retirement.
New legislation also allows for the unconstrained transfer of preservation funds to a retirement annuity, which allows for greater flexibility when it comes to pre-retirement withdrawal and capital access in the case of emigration.