New laws that will affect your retirement

3 min readMar 30, 2021

The latest Taxation Laws Amendment Bill included some changes that affect provident and provident preservation funds. These changes came into effect on the 1st of March 2021, but do not affect everyone. Read on to find out whether these laws are something you need to consider when planning for retirement.

I’m under 55 years of age and I am a member of a provident fund or a provident preservation fund

As of 1 March 2021, provident funds are affected by the same laws that govern pension funds and retirement annuities regarding access to cash on retirement. Here are 2 big changes that were implemented:

Previously, if you were a member of a provident fund or provident preservation fund, you were allowed to withdraw 100% of your savings upon retirement. You’ll now only be able to take one-third of the total value of your retirement fund in a lump sum, and the rest as an annuity.

Transfers between retirement funding vehicles will be tax-free from 1 March 2021. This is to give people more options to conserve and integrate their retirement benefits.

I’m over the age of 55 and a member of a provident fund or a provident preservation fund

If you’re a member of a provident fund and are 55 years or older on 1 March 2021, these changes don’t affect you, provided you remain a member of the same provident fund or provident preservation fund.

I’m a member of a provident preservation fund and am planning to emigrate

As a rule, you’re not allowed to withdraw from your provident preservation fund before the age of 55, however, if you wished to financially emigrate, you were previously allowed to withdraw the funds in your provident preservation fund.

These laws have now changed. If you wish to emigrate financially, you’ll need to be a non-tax resident for at least three consecutive years before you’ll be granted a pre-retirement withdrawal. This doesn’t apply to provident or pension funds.

If you’ve already formally emigrated for purposes of exchange control, or your application for emigration has been received on or before 28 February 2021, the new laws regarding emigration won’t apply to you.

What to consider when planning your retirement

Consider what you want to do after you retire. If you’re planning on purchasing a home in a retirement village, take a big trip overseas, buy a car or live out your days on a yacht when you retire, make sure the one-third lump sum you’ll be able to take upon retirement will be enough for you to execute your retirement plan. Alternatively, you can consider diversifying your investment portfolio in order to be less dependent on this lump sum and be able to withdraw from other investment and savings vehicles.

For readers over 55 with existing provident funds, it may be important to factor in the value of retaining the option to commute 100% of your fund on retirement. For most other savers, these new laws are unlikely to have a significant effect, but help to standardise the treatment of retirement products. The value of understanding these changes is to be aware of the options available to you when you retire and to plan accordingly so that you are in the best financial position.

Important notes

These new restrictions only apply to contributions made after 1 March 2021 and if you have less than R247,500 in your fund, you’ll be able to withdraw the full amount upon retirement.

Written by @Lisaslippers101020




Thoughts, observations and insights. About money, life and 22seven. Visit