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"provident preservation fund"

means a pension fund organization 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 whose membership of that fund has terminated due to—

[Words preceding paragraph (a)(i)(aa) substituted by section 3(1)(w) 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;
(bb) the winding up or partial winding up of that fund, if the members elected or are required in terms of the rules to transfer to this fund; or
(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 members elected or are required in terms of the rules to transfer to this fund;
(ii) former members of any other pension fund, pension preservation fund, provident fund or provident preservation fund—

[Words preceding paragraph (a)(ii)(aa) substituted by section 3(1)(x) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015) - effective 1 March 2019]

(aa) if that fund was wound up or partially wound up; or
(bb) if the member elected to have any lump sum  benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule transferred to that fund and who made this election while they were members of that other fund;
(iii) former members of a provident fund or nominees or dependants of that former member in respect of whom an "unclaimed benefit" as defined in the Pension Funds Act is due or payable by that fund;
(iv) a person who has elected to transfer an amount awarded to that person in terms of a court order contemplated in section 7(8) of the Divorce Act, 1979 (Act No. 70 of 1979), from a provident fund or provident preservation fund for the benefit of that person; or
(v) former members of a provident fund who have elected to have a lump sum benefit contemplated in paragraph 2(1)(c) of the Second Schedule transferred to this provident preservation fund and who made the election while they were members of that other fund;

[Paragraph (a)(iv) inserted by section 1(1)(r) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 March 2019 (section 1(5)]

(b) payments or transfers to the fund in respect of a member are limited to any 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) substituted by section 1(1)(s) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 March 2019 (section 1(5)]

(i) a pension fund, pension preservation fund, provident fund or provident preservation fund of which that member was previously a member; or

[Paragraph (b)(i) substituted by section 3(1)(y) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015) - effective 1 March 2019]

(ii) a 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;
(c) with the exception of amounts transferred to any pension fund, pension preservation fund, other provident 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 provident preservation fund: Provided that—
(i) this paragraph applies separately to each payment or transfer to the fund contemplated in paragraph (b);
(ii) a member shall, prior to his or her retirement date, be entitled to the payment of a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where a member—
(aa) 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; or
(bb) departed from the Republic at the expiry of a visa obtained for the purposes of—
(A) 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
(B) 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
(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) in respect of that transferred amount, except to the extent that it is an amount contemplated in subparagraph (ii); and

[Proviso to paragraph (c) substituted by section 1(1)(t) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 March 2019 (section 1(5)]

(d) a member, other than a member contemplated in paragraph (a)(iii) of this proviso, will become entitled to a benefit on his or her retirement date:
(e) not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account:
(a) in the case of a person who is a member of a provident fund and who is 55 years of age or older on 1 March 2019—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2019;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2019; 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 is a member of a provident fund —
(i) any amount contributed to a provident fund prior to 1 March 2019;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2019; 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),

reduced by any amounts permitted in terms of any law to be deducted from the member’s individual account of the provident fund;

[Paragraph (e) substituted by section 1(1)(d) of Act No. 2 of 2016 - effective 1 March 2019]

Provided further that—

(i) the rules of a provident 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 the provident 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)(zP) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]

 


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