Will I lose my provident fund if I move to a different country?

The long answer

No. New retirement laws will kick in from 1 September 2024: that means that you will still be able to withdraw any funds you have saved before 1 September 2024 if you lose your job or resign. 

On this lump sum, you would pay tax in line with the current retirement fund withdrawal tax table. Only the first R27,500 is tax free. After that, these are the SARS figures for how a lump sum withdrawal will be taxed in the 2025 tax year (1 March 2024 – 28 February 2025), which SARS says are unchanged from the 2024 tax year: 

After 1 September 2024, the two-pot system will kick in, where the contributions you make to the provident fund will go into two pots: one third will go to your savings pot and the other two thirds to your retirement pot. You will not be able to withdraw funds from the retirement pot until you actually retire, but you can make a yearly withdrawal from the savings pot. The money in your retirement pot will be used to buy you a monthly pension when you retire. 

But as News24 points out, you will still keep all your rights to access the savings you made before 1 September 2024 (the vested pot).

Allan Gray says that if you were a member of the provident fund and were 55 or older on 1 March 2021, you will be excluded from the two-pot system unless you want to participate. This exclusion means that nothing will change for you, and all the rules currently in place for your retirement fund account will continue to apply. If you choose to participate in the two-pot system, from the month after you made your choice, your contributions will be allocated to the savings and retirement components, while your existing benefit will be vested. 

News24 says that this is what you will be able to access when you resign, are retrenched or dismissed after the new system comes into effect on 1 September 2024: 

Vested pot (savings before 1 September 2024)

You can take what is in your vested pot in cash if you need to do so. In the initial years of the new system, this will be the largest portion of your savings. If you are without work and need the money, you will be able to access it. 

Savings pot 

You will also be able to withdraw the savings that are in your savings pot, as long as you have not already made a withdrawal in that tax year. The exception is if your savings pot is less than R2,000, as you will then be able to take it in cash even if you have already withdrawn during the tax year.

Moonstone Information Refinery says that there are many misunderstandings about how the new provident fund laws will affect people. It’s important to understand that the vested component is what you have saved in your provident fund up to 1 September 2024. 

They explain, “Members will continue to have the same rights to access their retirement benefits on resignation, retrenchment, or dismissal after 1 September as they do now. In these instances, they can still withdraw the savings in their vested component as a cash lump sum. Therefore, it is unnecessary for them to resign, based on the misconception that if they don’t access their benefits now, they will not be able to do so after 1 September.” 

When you retire, lump-sum withdrawals from the savings component are taxed according to the retirement fund lump-sum benefits table. The first R550,000 is tax-free. 

“Members cannot access the money in the retirement component before they retire, even if they are retrenched. Members who are retrenched will have access to the money in their savings component and vested component (if they have one).” 

What if you decide to live in another country? Unless you have a retirement annuity, which is a private retirement fund not linked to an employer like a pension or provident fund, the same rules that I have set out above would apply to accessing your provident fund. 

I hope all the above is helpful.

Wishing you the best,
Athalie