Retirement Fund Reform 2021

by | Mar 3, 2021 | Personal Finance

The South African Government has been in discussion since 2011 about introducing extensive retirement reforms to promote a culture of retirement savings. Many of these reforms were initiated, with the latest being the annuitisation of provident funds. Ridhaa Damon, MD and Head of Advisory of Lionwealth Capitol says this was needed as unfortunately too many South Africans have a spending culture and sadly too many retire poor because of poor financial decisions made in their younger days.


March 2021 is T-day. This is the day when it will become a requirement for provident funds to be annuitized upon retirement. This means that all the different types of retirement funds such as retirement annuity funds and pension funds will now be aligned with provident funds. From T-day onwards, on retirement, provident fund members will be able to take a one-third lump sum benefit from their fund and structure a monthly income (annuitize) from the remaining two-thirds.

Please note that the above applies to the retirement event. Should you leave your provident fund due to resignation, retrenchment or dismissal, a withdrawal option is still available to you, and is unaffected by the annuitisation referred to above.

It is important to understand that the new requirements will not apply to what is known as “vested” benefits, or those benefits accumulated before T-day and any investment growth on those benefits after that date. The new requirements will apply only to “non-vested” benefits, which are the contributions and investment growth on those, which accumulated in the fund after T-day.

With this, it is extremely important before making any and all financial decisions to speak to a qualified and knowledgeable financial advisor.

Here are 5 financial planning tips

  1. Start a retirement annuity as early as possible in your working life, even if you have a pension or provident fund through your employment. Those alone are often not enough to retire comfortably. See it as your younger self paying your older self’s salary. Work hard and save when you are young and have the energy. You may not see it now but your older self will be very grateful.
  2. Insure your income. It is the one thing that pays for all your expenses including your insurance. Ask your Financial Advisor about income protection.
  3. If you resign or are retrenched and are not at retirement age yet, preserve as much of your pension or provident funds for retirement. If possible, try not to access it at all until you retire.
  4. Increase you Retirement Annuity contribution annually by as much as your pocket will allow. You may claim a tax rebate for up to 27.5% of your income on an annual basis.
  5. First step to proper financial planning is to create a budget. It helps you understand your finances better and distinguish between which expenses and income, and wants and needs.


No time like the present

There is no time like the present to secure your financial future. Speak to a financial advisor about retirement products. Contact a lawyer to have your will drafted. And if you are struggling with your debt, make use of a debt counsellor.

Free Call Back Form

We'll Contact You!

"*" indicates required fields

Accept terms and conditions?*
This field is for validation purposes and should be left unchanged.

Related posts

How to Get a Loan Under Debt Review

How to Get a Loan Under Debt Review

How to get a loan under debt review   If you're wondering how to get a loan under debt review, your debt counsellor should inform you that you will not be allowed to until you settle your debts. So what is debt review and how does it work? Debt review is a legal...

Writing A Letter Of Demand: Essential Steps

Writing A Letter Of Demand: Essential Steps

Have you ever found yourself in a situation where you've tried everything to get paid, but nothing seems to work? Enter the letter of demand. This is often the final step you take before starting legal proceedings. A letter of demand clearly states how much money is...

How to Sell My Car Safely: A Comprehensive Guide

How to Sell My Car Safely: A Comprehensive Guide

Selling your vehicle Handling car payments can be tricky, especially when it gets to a time where you can no longer afford the monthly installments. A great option to get yourself out of the mud, selling your car before you miss any payments, and using the proceeds to...