Should I transfer to a preservation fund or a retirement annuity?

Preservation funds and retirement annuities (RAs) serve different purposes in retirement planning. A preservation fund is specifically designed for when you change jobs and want to preserve your existing provident fund or pension fund savings. In essence, you can only transfer "to a preservation fund" from these types of retirement funds, not to an RA.

On the other hand, an RA is a retirement savings vehicle you open in your own name, separate from any employer-sponsored retirement plans. It allows you to save for retirement independently.

As of 1 September 2024, both preservation funds and RAs have limited withdrawal options, as outlined in the new two-pot retirement system regulations. These regulations aim to balance the need for emergency access with long-term savings preservation.

You can read more here about how the two-pot retirement system affects your retirement savings options, including preservation funds and RAs.