"pension preservation fund"
means a pension fund organisation which is registered under the Pension Funds Act and which is approved by the Commissioner in respect of the year of assessment in question:
Provided that the Commissioner may approve a fund subject to such limitations and conditions as the Commissioner may determine, and shall not approve a fund in respect of any year of assessment unless the Commissioner is satisfied in respect of that year of assessment that the rules of the fund provide that—
| (a) | membership of the fund consists of— |
| (i) | former members of any other pension fund, pension preservation fund, provident fund or provident preservation fund; |
[Paragraph (a)(i) substituted by section 3(1)(q) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015) - effective 1 March 2019]
| (aa) | resignation, retrenchment or dismissal from employment and who elected to have any lump sum benefit that is payable as a result of the termination transferred to that fund, including lump sums transferred from the member’s vested component, savings component and retirement component in the previous fund to the member’s vested component, savings component and retirement component in this fund; |
[Paragraph (a)(i)(aa) of the proviso substituted by section 1(1)(g) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024]
| (bb) | the winding up or partial winding up of that fund, if the member elects or is required in terms of the rules to transfer to this fund; or |
[Paragraph (a)(i)(bb) substituted by section 6(1)(s) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010) - effective 1 March 2008]
| (cc) | a transfer of business from one employer to another in terms of section 197 of the Labour Relations Act, 1995 (Act No. 66 of 1995), and the employment of the employee with the transferor employer is transferred to the transferee employer, if the member elects or is required in terms of the rules to transfer to this fund; |
[Paragraph (a)(i)(cc) substituted by section 7(1)(zB) of the Taxation Laws Amendment Act, 2011 (Act No. 24 of 2011) - effective 1 March 2012]
| (ii) | former members of any other pension preservation fund— |
| (aa) | if that fund was wound up; or |
| (bb) | if the member elected to have any lump sum benefit contemplated in paragraph 2(b)(ii) of the Second Schedule transferred to this pension preservation fund and who made this election while they were members of that other fund, including lump sums transferred from the member’s vested component, savings component and retirement component in the previous fund to the member’s vested component, savings component and retirement component in this fund; |
[Paragraph (a)(ii)(bb) of the proviso substituted by section 1(1)(h) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
| (iii) | [Paragraph (a)(iii) deleted by section 2(1)(g)(k) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - comes into operation on 1 March 2021 (section 2(2)] |
| (iv) | a persons who have elected to transfer to that fund amounts awarded to those persons in terms of any court order contemplated in section 7(8) of the Divorce Act, 1979 (Act No. 70 of 1979), from a pension fund, pension preservation fund, provident fund or provident preservation fund for the benefit of those persons; |
[Paragraph (a)(iv) substituted by section 2(1)(l) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG 44083 dated 20 January 2021 - comes into operation on 1 March 2021 (section 2(2)]
| (v) | former members of a pension fund, pension preservation fund, provident fund or provident preservation fund who have elected to have a lump sum benefit contemplated in paragraph 2(1)(c) of the Second Schedule transferred to this pension preservation fund and who made this election while they were members of that other fund, including lump sums transferred from the member’s vested component, savings component and retirement component in the previous fund to the member’s vested component, savings component and retirement component in this fund; or |
[Paragraph (a)(v) of the proviso substituted by section 1(1)(i) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
| (vi) | former members of a pension fund, pension preservation fund, provident fund or provident preservation fund or nominees or dependants of that former member in respect of whom an ’unclaimed benefit’ as defined in section 1 of the Pension Funds Act and as contemplated in section 37C(1)(c) of the said Act is due or payable by that fund; |
[Paragraph (a)(vi) substituted by section 1(1)(h) of the Taxation Laws Amendment Act, 2022 (Act No. 20 of 2022), Notice No. 1541, GG47826, dated 5 January 2023]
| (b) | payments or transfers to the fund in respect of a member are limited to any amount allocated to the vested component, savings component or retirement component or an amount contemplated in paragraph 2(1)(a)(ii), (b) or (c) of the Second Schedule or any unclaimed benefit as defined in the Pension Funds Act that is paid or transferred to the fund by— |
[Words preceding paragraph (b)(i) of the proviso substituted by section 1(1)(j) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
| (i) | [Paragraph (b)(i) deleted by section 74(1)(c) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021 - deemed to have come into operation on 8 January 2016 (section 74(2))] |
| (ii) | a pension fund, pension preservation fund , provident fund or provident preservation fund of which such member's former spouse is or was previously a member and such payment or transfer was made pursuant to an election by such member in terms of section 37D(4)(b)(ii) of the Pension Funds Act; |
[Paragraph (b)(ii) substituted by section 2(1)(j) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG 44083, dated 20 January 2021 - comes into operation on 1 March 2021 (section 2(2)]
| (c) | with the exception of amounts transferred to any other pension fund, pension preservation fund, provident preservation fund or retirement annuity fund, not more than one amount contemplated in paragraph 2(1)(b)(ii) of the Second Schedule is allowed to be paid to the member during the period of membership of the fund or any other preservation fund: |
[Words preceding the proviso substituted by section 1(1)(i) of the Taxation Laws Amendment Act, 2022 (Act No. 20 of 2022), Notice No. 1541, GG47826, dated 5 January 2023]
Provided that—
| (i) | this paragraph applies separately to each payment or transfer to the vested component or an amount in paragraph 2(1)(a)(ii), (b) or (c) of the Second Schedule or any unclaimed benefit as defined in the Pension Funds Act that is paid or transferred to the fund; |
[Paragraph (c)(i) of the proviso substituted by section 1(1)(k) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
| (ii) | a member shall, prior to his or her retirement date, be entitled to the payment of— |
| (aa) | a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where a member— |
| (a) | is a person who is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control in respect of applications for that recognition received on or before 28 February 2021 and approved by the South African Reserve Bank or an authorised dealer in foreign exchange for the delivery of the currency on or before 28 February 2022; or |
| (b) | is a person who is not a resident for an uninterrupted period of three years or longer on or after 1 March 2021; or |
| (c) | departed from the Republic at the expiry of a visa obtained for the purposes of— |
| (AA) | working as contemplated in paragraph (i) of the definition of ‘visa’ in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002); or |
| (BB) | a visit as contemplated in paragraph (b) of the definition of ‘visa’ in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002), issued in terms of paragraph (b) of the proviso to section 11 of that Act by the Director-General, as defined in that Act; and |
| (bb) | an amount from the retirement component and vested component, deemed to be paid as a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule, where a member— |
| (A) | is a person who is not a resident for an uninterrupted period of three years or longer on or after 1 March 2021; |
| (B) | departed from the Republic at the expiry of a visa obtained for the purposes of— |
| (AA) | working as contemplated in paragraph (i) of the definition of ‘visa’ in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002); or |
| (BB) | a visit as contemplated in paragraph (b) of the definition of ‘visa’ in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002), issued in terms of paragraph (b) of the proviso to section 11 of the Act by the Director-General, as defined in that Act; or |
| (C) | is a person who is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control in respect of application for that recognition received on or before 28 February 2021 and approved by the South African Reserve Bank or an authorised dealer in foreign exchange for the delivery of currency on or before 28 February 2022; |
[Paragraph (c)(ii) of the proviso substituted by section 1(1)(l) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
| (iii) | a member who has transferred a retirement interest in terms of paragraph 2(1)(c) of the Second Schedule to this fund shall not be entitled to payment of a withdrawal benefit as contemplated in paragraph 2(1)(b)(ii) of the Second Schedule in respect of that transferred amount, except to the extent that it is an amount contemplated in subparagraph (ii) or a savings withdrawal benefit; |
[Paragraph (c)(iii) of the proviso substituted by section 1(1)(m) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
| (d) | a member, other than a member contemplated in paragraph (a)(vi) of this proviso, will become entitled to a benefit on his or her retirement date; and |
[Paragraph (d) substituted by section 1(g) of the Taxation Laws Amendment Act, 2023 (Act No. 17 of 2023), Notice No. 4226, GG49894, dated 22 December 2023 - effective 22 December 2023]
| (e) | not more than one-third of the portion of the retirement interest in the vested component may be commuted for a single payment, and that the remainder, calculated together with the member’s interest in the retirement component, must be paid in the form of an annuity (including a living annuity), a combination of annuities (including a combination of methods of paying the annuity) or a combination of types of annuities except where two-thirds of the member’s total interest in their vested component, calculated together with the member’s total interest in their retirement component does not exceed R165 000, where the member is deceased or where the member elects to transfer the retirement interest to a pension preservation fund, provident preservation fund or a retirement annuity fund: |
[Words preceding Paragraph (e)(a) of the proviso substituted by section 1(1)(n) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
| (a) | in the case of a person who was a member of a provident fund or provident preservation fund and who was 55 years of age or older on 1 March 2021— |
| (i) | any amount contributed to a provident fund or transferred to a provident preservation fund prior to, on and after 1 March 2021 of which that person was a member on 1 March 2021; |
| (ii) | with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on and after 1 March 2021; and |
| (iii) | any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii); or |
| (b) | in any other case of a person who was a member of a provident fund or a provident preservation fund on 1 March 2021— |
| (i) | any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021; |
| (ii) | with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021: Provided further that in the case where the remaining balance is utilised to provide or purchase more than one annuity, the amount utilised to provide or purchase each annuity must exceed R165 000; and |
| (iii) | any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii), |
reduced proportionally by an amount permitted to be deducted in terms of the Pension Funds Act from the member’s individual account or minimum individual reserve of the provident fund or the provident preservation fund prior to, on or after 1 March 2021: Provided further that in the case where the remaining balance is utilised to provide or purchase more than one annuity, the amount utilised to provide or purchase each annuity must exceed R165 000: Provided further that the Commissioner may approve a fund in respect of any year of assessment, if the Commissioner is satisfied that the rules of the fund provide for the creation of the ‘savings component’, ‘retirement component’ and ‘vested component’ as defined in section 1;
[Further proviso inserted by section 1(1)(o) of the Revenue Laws Amendment Act, 2024, Notice No. 4924, GG50750 dated 4 June 2024 - comes into operation on 1 September 2024 and applies in respect of years of assessment commencing on or after that date (section 1(2))]
Provided further that—
| (i) | the rules of a pension fund that is doing the business of a preservation fund as prescribed by the Commissioner from time to time must be submitted to the Commissioner for approval in terms of the provisions of this definition before 30 September 2010; and |
| (ii) | the rules of a pension fund contemplated in paragraph (i) that are submitted before 30 September 2010 are deemed to have been approved under this definition with effect from the date that the rules are submitted until the date that the Commissioner notifies the fund of its status under this definition; |
[Definition substituted by section 4(1)(zG) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]