How transfers of retirement annuity contracts have changed
Since 1 March 2023, the law prescribing the transfer of a contract from one retirement annuity fund to another has changed.
Before this date, you had to transfer all your contracts from one retirement annuity fund to another. You couldn’t transfer only one contract if you had two contracts in the same retirement annuity fund.
What has changed?
If you have more than one contract in a retirement annuity fund, you may transfer one or more of those contracts to a new retirement annuity fund and leave the rest in the existing fund, subject to certain minimums.
The partial transfer is allowed if:
- The value of each transferred retirement annuity contract is more than R371 250.
- The total value of the remaining retirement annuity contracts is also more than R371 250.
How it works
For example, a member has three contracts:
- Contract 1 - R400 000
- Contract 2 - R300 000
- Contract 3 - R200 000
The member will be entitled to transfer contract 1 to another retirement annuity fund because the value of that contract is more than R371 250, and the total value of the remaining two contracts is also more than R371 250.
The member would not be entitled to transfer only contract 2, only contract 3 or both contracts 2 and 3 to another retirement annuity fund because the value of each transferred contract (individually) is less than R371 250.
You may not transfer a part of an individual contract to another retirement annuity fund - if, for instance, you have two contracts:
- Contract 1 - R1 200 000
- Contract 2 - R800 000
You cannot transfer only R600 000 of contract 1 to another retirement annuity fund; you will have to transfer the entire R1 200 000 of contract 1 or the entire R800 000 in contract 2 to another retirement annuity fund.
Before retirement- Retirement annuity fund paid-up withdrawal
- R15 000
- If the total value of your paid-up benefit in the fund is less than R15 000, you can withdraw your benefit as a lump sum before you turn 55.
At retirement- Retirement benefit
- R247 500
If your total fund benefit is less than R247 500 at retirement, you can take the full benefit as a retirement lump sum. If you have more than one contract in the same fund and you stagger your retirement by retiring from each contract at a different time, SARS* will take the value of the previous contract(s) you retired from into account to determine whether the R247 500 threshold is breached. For example, if you have three contracts in your retirement annuity fund with the following values:
Contract 1 – R200 000
Contract 2 – R20 000
Contract 3 – R60 000
If you retire from contract 1, you can take the full R200 000 as a lump sum because it is less than R247 500. If you then retire from contract 2 thereafter, SARS will add the value of the previous retirement benefit (R200 000) to the current retirement benefit (R20 000). The combined value of these two contracts (R220 000) is less than R247 500, meaning that you can take the R20 000 as a lump sum retirement benefit. When you then retire from contract 3, the value of that retirement benefit (R60 000) will be added to the previous two retirement benefits. The combined values of the current retirement benefit and the previous two (R220 000) is R280 000. This is more than R247 500, meaning you will only be able to take a maximum of one-third of contract 3 in as a lump sum retirement benefit.
After retirement- Living annuity withdrawal
- R125 000
- If the remaining value on your living annuity contract is less than R125 000, you can take that as a lump sum. If you have more than one living annuity contract in the same fund or with the same insurer, SARS will apply the same criteria as set out above regarding retirement.
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