Alignment of Pension, Provident and Retirement Annuity Funds
From 1 March 2018 and subject to Government agreement with stakeholders, the retirement benefits paid from provident funds will be aligned with, pension and retirement annuity funds.
Provident funds will be subject to certain special rules for 'vested benefits' as detailed below.
Members of provident funds or preservation provident funds are currently entitled to receive their benefits as cash lump sums at retirement.
The fund benefits (retirement savings) of all provident fund and preservation fund which have accumulated up to 1 March 2018, plus the future growth on this fund value will be regarded as 'vested benefits'.
All contributions and growth thereon which accumulate after 1 March 2018 will not comprise vested benefits and you will only be able to take out 1/3 of the benefits accumulated after 1 March 2018 as a cash lump sum payment. The remaining 2/3 must be used to buy an annuity that will pay you a monthly pension or annuity.
Members aged 55 years on 1 March 2018 have the right to additional vested benefits.
This means if you are 55 years or older on 1 March 2018, AND you remain a member of the same provident fund, you will not be affected by these legislative changes. You may still receive your entire retirement benefit as a cash lump sum at retirement.
If you transfer out of your provident fund to another retirement fund after 1 March 2018 you will only be entitled to your fund value (retirement savings) as at the time of transfer (plus growth) as a cash lump sum on retirement from that subsequent retirement fund.