Leaving your job — what happens to your pension capital?

Whether you are moving to a new job, starting your own business, or simply taking control of your financial future — deciding what to do with the pension capital you have built up is one of the most important decisions you will make. Preserve it wisely now and it can be the foundation of your financial independence at retirement. Read more ↓

You are able to access R25 000 of your pension capital tax free at this point. However, taking this tax advantage now disqualifies you from a larger R500 000 tax-free portion later at retirement — so think carefully before cashing out. The strongest case is to preserve the capital and let it keep working for you.

A preservation fund is registered under the Pension Fund Act and offers you the flexibility to preserve your capital while retaining a degree of access. Unlike moving to an existing pension fund — where you cannot access funds before retirement — a preservation fund allows you to make one full or partial withdrawal before retirement. This flexibility can be used to draw capital for a house, start a business, pay tuition, or cover other needs.

A preservation fund can in most cases accept both pension and provident capital under separate sections — making it a versatile solution even if your previous and new employer's funds are of different types. You retain control over where and how the capital is invested, and you can transfer to another preservation fund if you are unhappy with your current one.

Our VPM Preservation Fund offers investment portfolios geared towards capital growth and protection, with exposure to offshore investments. If you are ready to take control of your pension capital, come and talk to us. We will help you choose the most appropriate solution. Our doors are always open.