Should I transfer to a preservation fund or a retirement annuity?

Question:

hi, i have resigned, and wish to know the pros and cons vs. transferring a preservation fund to another preservation fund vs.a retirement annuity fund.

Answer:

John, Both products are retirement funds for individuals, governed by the Pension Funds Act. A preservation fund is more flexible than a retirement annuity. With a retirement annuity you can only access the money from age 55, and you must then use two-thirds to buy an annuity. With a preservation fund you are allowed one (full or partial withdrawal) before retirement (earliest retirement age is 55). If it is a pension preservation fund, you must also use at least two-thirds of your benefit to buy an annuity if your retire (rather than withdraw) from the fund, with a provident preservation fund you can take the whole amount as cash (net of tax). With a retirement annuity fund you can make further contributions to the fund, while you cannot contribute to a preservation fund.