RFS Umbrella Provident Fund - RFS Administrators (Pty) Ltd

RFS Umbrella Provident Fund

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Member communication 1 of 2021

T-day retirement reform changes to Provident Funds

Please be advised that this is information of a general nature and does not constitute financial advice.

You receive this communication because you are a member of the RFS Umbrella Provident Fund.

  1. T-day effective from 1 March 2021

The Taxation Law Amendment Act of 2020 was signed into law by the President on 20 January 2021. This has enacted the long-awaited legislation which provides for the same annuitisation rules that apply to members of pension funds, pension preservation funds and retirement annuity funds, to be applied to members of provident funds and provident preservation funds, after 1 March 2021 (T-day).

However, the legislation protects the accrued rights of provident fund members as at T-day. This means that:

  • on retirement, members of these funds who are under age 55 on T-day, will still be permitted to take amounts which accrued before T day plus fund return in cash.
  • Members over age 55 on T day will have access to all amounts in the fund in cash on retirement from that fund.
  • This is referred to herein as “vested benefits”.
  • Amounts that are subject to the annuitisation rules will be termed “non-vested benefits”.
  • The sum of the vested and non-vested portions will be your total member share in the fund.

Note that T-day impacts you on your retirement from the fund. There is no change when you withdraw from the fund by means of resignation, dismissal, or retrenchment.

  1. Your withdrawal benefit (Total taxable benefit payable prior to retirement)

In the case of a provident fund, your vested and non-vested portions will become payable when your membership of the fund is terminated before you retire because of resignation, dismissal, retrenchment, or the termination of the fund.

Your entire withdrawal benefit can be taken in a cash lump sum and may be subject to deductions according to the law.

  1. Your retirement benefits

At the time of your retirement your total benefit will equal the sum of your Vested and Non-Vested portions.

  • You can take the entire vested portion as a cash lump sum.
  • You can take a maximum of one-third of your non-vested portion as a cash lump sum and must use the balance to buy a pension of your choice.
  • You will be able to take your non-vested portion in a cash lump sum if it is not more than R247 500. The latter is the de minimus amount set by government (National Treasury) which is subject to change from time to time.
  1. Administration System

We are pleased to report that the upgrades to our administration system to accommodate the T-date changes, is progressing according to plan and will be ready for implementation on 1 March 2021.

  1. Summary of changes

The amendments set out above can be summarised as follows: (the details for pension funds and retirement annuities (RA) were kept in the table to provide a complete reference table for all types of retirement funds)


Before 1 March 2021 

After 1 March 2021 

  Pension and RA  Provident  Pension and RA  Provident 


Access to benefits after normal retirement  Maximum one third in cash (taxable above R500.000). 


At least two thirds must buy income producing annuity. 


May take 100% in cash if value is below R247,500. 

May receive 100% of benefit in cash, subject to lump sum tax tables, or buy income-producing annuity with any portion of the value.  Maximum one third in cash (taxable above R500.000). 


At least two thirds must buy income producing annuity. 


May take 100% in cash if value is below R247,500. 

Maximum one third in cash (taxable above R500.000). 


At least two thirds must buy income producing annuity. 


May take 100% in cash if value is below R247,500. 

Vested rights – younger than 55  N/A  N/A  N/A  Members will have vested rights in benefits accumulated up to 28 February 2021 and its future growth, even if they transfer these benefits to retirement annuities or pension & pension preservation funds. 
Vested rights – 55 or older on 1 March 2021  N/A  N/A  N/A  If member stays a member of that same fund, rules as before 1 March 2021 will apply throughout. 


Contributions to the same fund up to the transfer date, even after 1 March 2021, will stay vested benefits. 


All contributions to the new fund and growth thereupon, will be subject to annuitisation. 

Should you require any further information contact info@rfsolutions.co.za

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.

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