Michael is changing jobs and already has two existing provident preservation funds. He wants to know if he can transfer his provident fund into his existing provident preservation fund and whether he can consolidate his two existing funds into one.
Maya replies: Considering that the average person will change jobs seven times during their careers it makes sense to consolidate your retirement funds both to cut down on administration costs and also for simplicity.
According to Adrian Burke, head of product management at Old Mutual, you can consolidate preservation funds if they are the same vehicle — ie: both are provident preservation or both are pension preservation funds.
In this case you have existing provident preservation funds and you are now resigning from your employment where you were a member of a provident fund. If the fund rules allow you may add the provident fund pay-out to one of your existing provident preservation funds.
The Income Tax Act also allows you to consolidate your two existing provident preservation funds and you would still be allowed one withdrawal from the fund in respect of each transfer.
Visit Smart Money for more news, blogs, tips and Q&As.
Post questions on the site for independent and researched information.