transfer pension fund to provident fund?

[khozamtho]

Hi guys,

I'm getting a new job and they use a provident fund,and my current job we're using a pension fund. I would like to know if its possible to transfer my pension fund to the provident fund and will i get taxed? how much?. I also heard about preservation fund(how does this one work?)

[rfnel]

I also heard about preservation fund(how does this one work?)

Hi khozamtho

I'm more or less in the same boat as you. My understanding (based on what the broker told me), is that you can transfer your money to a preservation fund tax-free, but you can't make any additional contributions into the preservation fund. Also, with a preservation fund you can make one withdrawal before retirement (either the full amount in the fund or a part of it). I'm not sure how much tax you would be paying on such a withdrawal.

I'm curious to hear more opinions on this.

[Dave A]

I'm not sure how much tax you would be paying on such a withdrawal.

It would be based on the lump sum taxation rules - pretty much your marginal rate over the past x years.

(I don't recall what x is offhand).

[Nickolai Naydenov]

The best advice would be transfer the money into a preservation fund tax free, at the same time you know that you have something towards retirement, make sure you use a company that has lots of exposure. Preservation fund allows you one withdrawal and is taxed according to the lump sum tax table before retirement that means tax will have to be calculated depending on the amounth. Pension and provident funds are different hence you can't mix the two. Lots of people make the mistake of withdrawing the money and busy stuff and when they get to retirement they have peanuts.
If you need help you are welcome to PM me that is what I do for a living(the advise won't cost you anything)

[khozamtho]

Thanks everyone, now I know that i can't transfer my pension to provident fund bcoz of tax implications,so i will just query with Old mutual to see if dey can transfer it to a preservation fund.

[Nickolai Naydenov]

Yes they can, it would take a while though, but that's just the way it is.