Initially proposed to commence on 1 March 2016, the government has been planning to align provident funds and provident preservation funds with all the other retirement vehicles. In the latest Tax Amendment Bill released in October 2020, National Treasury is now in the last stage of implementing these changes come 1 March 2021. This is known as T-Day.


-To help retirees from provident funds to better manage their money and have income during retirement i.e., reduce the risk of spending their retirement savings too quickly and placing a financial burden on family and the government.

-To curb dependency on government grants.

-Streamline all retirement vehicles to work in the same manner.

Current Legislation till 28 February 2021:

All members who belong to a provident fund have the option to take 100% of their savings in cash at retirement, while those on a pension fund are allowed to access ONLY 1/3 in cash and the balance to be used to purchase an annuity that will provide a monthly income (if the full balance in the pension is more than R 247,500). The same principle also applies to provident preservations as well as pension preservations.

New Legislation from 1 March 2021:

All provident fund contributions for members below the age of 55 will be aligned with the structure of pension funds together with the interest thereof. All existing funds plus interest thereof will not be impacted by these changes.

Members above the age of 55, will not be impacted as long as they remain members of that fund. Should they decide to move to another fund, they will only keep their vested right for contributions plus interest made at the old fund before and after T-Day. All future contributions and interests made at the new fund will have to conform to the new legislation.

How will this impact new provident fund members?

All members who commence contributions towards Provident funds after 1 March 2021 will fall under the new legislation. Should they have existing funds before T-Day, members can still enjoy their vested rights should they transfer to the new fund or preserve the amount.

I belong to a pension fund how does this affect me?

T-Day changes are aimed at aligning provident funds with pension funds, therefore do not affect pension funds or their members.

How will T-Day affect me should I take early retirement, get disabled or die in service?

The payment of these benefits will be subject to the rules of your fund.

Is T-Day the same as ‘prescribed assets’?

No. T-Day only aims to align provident funds with the rest of the retirement vehicles and has no connection with prescribed assets. Your fund investment structure will remain governed by Regulation 28 of the Pension Fund Act.

What happens if I leave employment before retirement and take cash after T-Day?

There is no change in legislation, you will be able to access your money subject to the applicable tax as per SARS guidelines.

I have an existing provident preservation fund, how will T-Day affect me at retirement?

All existing preservations will retain their status before T-Day i.e., full fund balance at retirement can be taken as cash in full at retirement.