Preservation funds
Pension & Provident Preservation Funds
Practical retirement guidance for every stage of the journey.
A preservation fund — a retirement fund built to receive a transfer from an employer's pension or provident fund when you leave that job — keeps your retirement savings invested tax-efficiently instead of being paid out in cash. Changing employers is one of the moments most likely to derail a retirement plan, and preserving your benefit is often, though not always, the option that keeps you closest to your original retirement goal.
What is a preservation fund?
A holding structure for retirement savings on the move
Transfer from an occupational fund
Accepts a transfer from an employer pension or provident fund when you leave.
Pension versus provident preservation funds
The type of preservation fund generally matches the type of employer fund you transferred from.
Continued retirement investment
Your savings remain invested toward retirement rather than being cashed out.
Access rules
Current legislation generally allows one withdrawal before retirement — rules should be confirmed before acting.
Options when leaving an employer
What you can generally do with the benefit
Why cashing out affects retirement
A long-term view of an early withdrawal
Taking a cash withdrawal when changing jobs provides money now, but it also removes capital that would otherwise have had years, sometimes decades, to continue growing toward your retirement. Even a single withdrawal earlier in a career can meaningfully change the savings available at retirement, simply because that capital no longer benefits from the remaining years of compounding. This isn't about right or wrong choices — it's about understanding the trade-off before deciding.
Pension versus provident preservation funds
Related but distinct structures
A pension preservation fund receives transfers from an employer pension fund, and a provident preservation fund receives transfers from an employer provident fund. Historically the two had different rules around how much could be taken as a cash lump sum at retirement, though legislation has moved to align their treatment over time. Because these rules can and do change, the specific position for your fund type should always be confirmed against current legislation before you make a decision.
Tax implications
What current rules say — and why figures need verifying
Transfers into a preservation fund from an approved retirement fund are generally not taxed at the point of transfer under current legislation, while any pre-retirement withdrawal is typically taxed according to the retirement tax tables in force at the time.
Tax tables and thresholds change from time to time. Figures should be verified against current SARS guidance before you make a decision — a Mbalwa adviser will confirm the applicable rules for your situation. Last reviewed 1 July 2026.
Investment choices inside a preservation fund
The plan doesn't stop at the transfer
Risk profile
Your comfort with volatility shapes suitable fund selection.
Time horizon
Years remaining until retirement affects an appropriate asset mix.
Fees
Administration and fund fees affect long-term growth.
Fund selection
The underlying funds available differ by preservation fund provider.
Diversification
A well-diversified mix reduces reliance on any single asset class.
Transfers and administration
What the process typically involves
Required documents
Identity documents, fund benefit statements and completed transfer forms.
Expected timelines
Transfers typically take several weeks, depending on the fund administrators involved.
Fund communication
Your adviser liaises with both the old and new fund administrators.
Tax directives
A tax directive from SARS is generally required before a transfer or withdrawal proceeds.
Avoiding unintended withdrawals
Careful paperwork helps ensure a transfer isn't accidentally processed as a taxable cash withdrawal.
How Mbalwa assists
Support through a job change
Option comparison
Weighing preservation against transfer or withdrawal for your situation.
Suitability analysis
Assessing what fits your goals, time horizon and risk profile.
Transfer coordination
Managing paperwork and communication with fund administrators.
Investment selection
Choosing suitable underlying funds within the preservation fund.
Ongoing review
Revisiting the plan as your circumstances and the rules change.
Frequently asked questions
Questions about preservation funds
A preservation fund is a retirement fund designed to receive a transfer from an employer's pension or provident fund when you leave that employer, keeping your retirement savings invested tax-efficiently rather than being paid out in cash.
When you resign, you generally have several options for your accumulated pension or provident fund benefit, including transferring to a preservation fund, transferring to a new employer's fund, transferring to a retirement annuity where applicable, or taking a cash withdrawal.
Current rules generally allow one withdrawal before retirement from a preservation fund, subject to the fund's rules and applicable tax. Using this withdrawal reduces the capital available to fund your eventual retirement income.
Transfers into a preservation fund from an approved retirement fund are generally not taxed at the point of transfer under current rules, while withdrawals may be taxed according to the applicable retirement tax tables in force at the time.
In many cases, preservation fund benefits can be transferred to a retirement annuity where this is permitted under current legislation and the fund's rules, and where it suits your broader retirement plan.
A pension preservation fund receives transfers from an employer pension fund, and a provident preservation fund receives transfers from an employer provident fund. Historically these had different rules at retirement, though legislation has moved to align their treatment over time — current rules should always be confirmed.
Timelines vary by fund administrator and the completeness of the required documentation, but transfers typically take several weeks once all paperwork and tax directives are in place.
Current rules generally allow only one preservation fund per pension type and one pre-retirement withdrawal per fund, so it is worth discussing your options with an adviser each time you change employer to choose the most suitable route.
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