From 1 Mar 2021, most members of provident retirement funds in South Africa are restricted to taking up to one-third of the value of their retirement fund as a lump sum upon their retirement, and must take the balance as an annuity. Previously, members could take their full benefit as a lump sum. Certain exceptions to the annuity requirement are permitted for fund members with lower balances and individuals approaching retirement age. The measures feature in Taxation Laws Amendment Act 25 of 2015 and should have taken effect on 1 Mar 2015, but were delayed due to continued discussions with labor unions. The rules on accessing cash upon retirement are now similar for members with different retirement vehicles.
The new rules will require provident funds to maintain accurate records of their members’ contributions prior to, and following, 1 Mar 2021, as well as contributions and investment returns accruing after that date.