Hollard Preservation Plan

The Hollard Preservation Plan provides a tax-efficient way for you to preserve your existing pension fund retirement savings. Savings are kept in a preservation fund until retirement at which time you will receive a retirement benefit.

The following may be transferred to the plan, subject to the product rules and relevant legislation:
 

• A provident fund or pension fund benefit transferred in the event of your resignation, retrenchment, or dismissal from an employer.
• A provident or pension preservation fund benefit transferred from another provident or pension preservation fund.
• A provident preservation and a pension preservation fund benefit, transferred at your request, or in the event of the winding-up of the fund.
• A benefit payable to you in the event of retirement from a pension or provident fund, can be transferred directly from your pension or provident fund.
• A benefit received as part of a divorce settlement via an approved court order, which you can elect to invest into the Pension Preservation Plan.

When transferring Benefits to the Fund, all components must be transferred together (i.e. no splitting of components are permitted).
 

Income tax will be deducted from any benefit taken in cash before it is paid out on withdrawal, retirement, or death, in accordance with income tax legislation. The investment is not subject to capital gains tax, interest income tax, or dividend taxes.

You can choose from a range of Investment Portfolio options. You may select any one or a combination of them and may switch between portfolios at your discretion. It is important for you to monitor and review your investment portfolio selection so that it continues to meet your financial needs.

The Fund cautions Members against implementing different investment strategies across components. Collectively the components aim to provide Members with an income in retirement and must be managed as such. Members should consult with your financial advisor in this regard.

To protect a member’s retirement benefit, the Pension Funds Act 24 of 1956 contains guidelines that regulate the extent to which a member may invest in certain asset classes. Hollard is required to ensure that each member’s investment complies with these asset exposure limits, which broadly speaking are as follows:
 

• 75% exposure to equities.
• 50% exposure to non-government debt instruments.
• 45% exposure to offshore assets.
• 25% exposure to property.

Each Investment Portfolio offered to investors in the Hollard Preservation Plan complies with the Regulation 28 limits.

No, the right to benefits may not be ceded or pledged.

No, due to the nature of the product, you may not cancel and no cooling-off period applies. You may transfer your investment to another approved pension fund or retirement fund.

No, the Preservation fund does not provide a guarantee on the investment value of your investment account, nor does it guarantee the performance of the investment. The market value of the investment may fluctuate at any time. The investor carries the investment and market risk, which may include the possibility of losing capital.

No, you may not make additional contributions to your investment account. You may open multiple investment accounts should you have benefits from separate employer’s pension funds that you wish to preserve.

One withdrawal per tax year (i.e. 1 March to 28 February) is permitted from the Savings Component (minimum withdrawal value of R2000 applies). A once-off withdrawal of up to 100% before the minimum retirement age of 55 from the Vested Component (incl any Vested Rights held) is permitted. No withdrawals are permitted from the Retirement Component.

Monies from the Savings Component should only be withdrawn when you find yourself in financial distress or in emergency circumstances. Withdrawing from this component will reduce your ability to earn the required income in retirement and should be avoided as far as possible. The Fund cautions against this practice and would encourage you to preserve the amount in the Savings Component until retirement.

Members may withdraw from the Vested Component, Vested Right and Retirement Component when the Member:

• Ceases to be tax resident for an uninterrupted period of 3 years; or
• Departs from South Africa at the expiry of a work visa, or
• Where the Member filed their financial emigration on or before 28 February 2021 and approved by the South African Reserve Bank or an authorised dealer in foreign exchange on or before 28 February 2022.

You may request to retire from the Fund once you have reached the age of 55. You may request an early retirement in the event of permanent disability due to ill health or illness. Early retirement requests are granted at the sole discretion of the Trustees of the Fund.

Depending on what components forms part of your retirement savings, the following options are available to you:

Retirement Component: The full value must be used to purchase a compulsory annuity from an insurer.
Savings Component: The full value can be withdrawn in cash, and any amount not withdrawn must be used to purchase a compulsory annuity from an insurer.
Vested Component: One-third of the value may be withdrawn in cash, with two-thirds being used to purchase a compulsory annuity from an insurer. Any amount not withdrawn must be used to purchase a compulsory annuity from an insurer.
Vested Right: The full value can be withdrawn in cash, and any amount not withdrawn must be used to purchase a compulsory annuity from an insurer.

Your Hollard Preservation Plan investment does not form part of your estate and will not be governed by your last will and testament. In accordance with Section 37 of the Pension Funds Act, the Trustees of the Preservation Fund have full discretion to award death benefits as they feel appropriate. Dependents will be given preference when allocating the benefit in accordance with legislation, after which nominated beneficiaries and your estate will be considered. The benefit due on the death of the investor is the value of the investment at the time of processing the death claim, less any fees and charges. Each party who has been awarded a portion of the death benefit will receive it in one of the following ways: 

• The purchase of a compulsory annuity from a registered long-term insurer.
• A cash lump sum payout.
• A combination of compulsory annuity purchase and cash pay-out.

Any benefits taken in cash will be subject to income tax.

It is recommended that you appoint a financial adviser to assist you with your pension fund. Hollard Life, in their capacity as the administrator and the manager, doesn’t provide financial advice and may only supply factual or administrative information relating to investment products and portfolios.