T-Day copy The T-Day reforms aim to make retirement more uniform by annuitizing provident funds. Annuities are pensions purchased with a lump sum (in this case, the money you saved by contributing to a retirement fund). The reforms aim to align provident and pension funds, protect post-retirement incomes and prevent people from depleting their retirement savings too fast.

At Sanlam Corporate, we understand how important it is for your employees to know what's going on in their retirement fund because this is money they've worked hard for, so they can retire with confidence. We also know that the benefit statement may seem a little complicated, so we've created a short video to help members understand their statement and see how their money is being invested.

From 1 March 2021, retirement benefits from provident funds and provident preservation funds will be governed by the same rules as pension funds. So, from T-day (1 March 2021), retirement benefits under provident funds and provident preservation funds will be compulsory annuitised, except for vested benefits.

Starting 1 March 2021, retirement member shares will be divided into vested and non-vested portions. The vested member portion refers to retirement benefits and the interest thereon, up to 28 February 2021. Upon retirement, these benefits won't be subject to annuitisation and can be taken in cash.

The non-vested member portion will reflect all retirement fund contributions and interest thereon from 1 March 2021 onwards. At retirement, this portion will be annuitized - unless the total is under R247,500. In such a case, then a member can take the full amount in cash upon retirement. If the non-vested portion is more than R247, 500, then a member can only take up to one third of the benefit in cash and must use the balance to purchase a pension.

However, there are some concessions to the rules for members who are 55 years and older on T-day: A person 55 years and older on 1 March 2021 who is saving in provident funds and stays in those funds until retirement will not be affected by the T-Day reforms. At retirement, these members will be able to withdraw their full benefits (including interest). This includes any contributions made to the provident fund after 1 March 2021.

For those younger than 55 on T-day and saving in a provident or provident preservation fund, all benefits accumulated up to 28 February 2021 plus interest will be allocated to the vested member portion. Benefits allocated in the vested portion may be taken in cash upon retirement, resignation, termination or retirement due to illness. From 1 March 2021, all new contributions will be allocated to the non-vested portion of the fund. If the benefit amount in this portion is more than R247, 500, then only one third of the benefit can be taken in cash, and the balance must be used to purchase a pension.

If a member is 55 years or older on 1 March 2021, but transfers to a new fund after 1 March 2021, all contributions to the provident fund of which he/she was a member on 1 March 2021, plus interest, will remain exempt from annuitisation. At least two thirds of all contributions to the new fund (plus interest thereon) will however have to be annuitised, except if the value does not exceed R247 500.

It’s important for members to update their beneficiaries regularly to make sure that their loved ones are taken care of, in the event of their death or when circumstances change – for example through divorce, marriage, or the birth of a child.

Without an updated beneficiary nomination form, the trustees are not in a position to identify all dependants and take the members' wishes into account when allocating their fund death benefits. The Trustees will have to allocate and pay the benefit according to the limited information they may have.

Therefore, updating beneficiaries enables Trustees of the Fund and/or Insurer to allocate benefits to the members' loved ones. This could be a partner, parents, siblings, children or anyone close to the members' heart. Members can access the Sanlam Member Portal (cp.sanlam.co.za) to update their beneficiary information today.