What happens to my retirement fund after I resign?

When you resign from your job, you'll need to make important decisions about your retirement savings. Your options will depend on whether you have a provident/pension fund or a Retirement Annuity (RA).

If you have a Provident Fund or Pension Fund

From 1 September 2024, under the new two-pot system, your retirement savings will be divided into three components, each with different rules:

The retirement component (mandatory preservation): This portion must be transferred to a preservation fund when you resign. You cannot withdraw this money until retirement age. This ensures you maintain a core retirement savings base regardless of job changes.

The savings component: You can choose to withdraw from this portion, subject to annual limits and tax. However, preserving these funds in a preservation fund will help grow your retirement savings.

The vested component (your pre-September 2024 savings): You can withdraw this portion in full, though it will be subject to tax. As with the savings component, you have the option to preserve these funds instead.

If you have a Retirement Annuity (RA)

Your RA is already in your name, so resigning doesn't require immediate action. You can:

• Continue with your existing RA without changes
• Transfer to another RA provider if you prefer different features or fees

From September 2024, the two-pot system will allow you to access the savings component once per tax year (minimum R2,000), even without resigning. However, the retirement component and your pre-September 2024 funds (vested component) must remain invested until retirement age (typically 55).

Understanding preservation

Preserving your retirement savings means transferring your funds to a Preservation Fund where it can continue to grow. Even if you decide to withdraw from your savings or vested components, consider preserving at least a portion to maintain your retirement savings momentum.

Remember that withdrawals are subject to tax and will reduce your retirement savings significantly. Our Two-Pot Calculator can help you understand the impact of different choices on your retirement savings.