Preservation Funds

What are Ecsponent Preservation Funds?

The Ecsponent Preservation Funds cater for investors who want to preserve their retirement benefits in a tax-efficient manner. The Ecsponent Preservation Funds are legal entities, registered with the Financial Sector Conduct Authority (FSCA) and managed by a board of trustees.

When leaving an employer you have the choice to either withdraw the retirement benefit you have accumulated while being employed, or preserve it for the future. Withdrawal of the benefit comes with a hefty tax penalty.

When can I access my preserved retirement funds?

  • You will be eligible to access the funds, and additional investment returns less costs, upon retirement (after age 55).
  • When you access your funds at retirement age, you are entitled to withdraw one third as a cash lump sum, of which a portion is not taxable. The remaining two-thirds that is not taken as cash must be used to purchase an annuity, which will provide you with an income during retirement.
  • In the event of your death, the Fund’s trustees will apportion your accumulated investment value according to the needs of your dependants and nominated beneficiaries.

Tax benefits

Preservation funds are tax-efficient investment vehicles.

  • You pay no tax on the funds transferred from an employer’s retirement fund to the preservation fund, provided you take no cash withdrawals.
  • The income, capital gains and dividends generated from the investments within a preservation fund are exempt from taxation.

Why should I choose Ecsponent Preservation Funds?

  • They are easy to understand, low cost and flexible.
  • You may transfer your existing preservation fund to an Ecsponent Preservation Fund with no initial fees. Likewise, should you wish to transfer your preservation fund from Ecsponent to another provider, you will incur no penalties.
  • The Fund will give you access to a range of investment options with exposure to all the relevant asset classes necessary to diversify your retirement benefit.
  • Ecsponent’s products are compliant with Regulation 28 of the Pension Funds Act, and Trustees will adjust your portfolio to ensure compliance.

What if I want to make regular investment contributions?

You will not be able to make regular contributions to a preservation fund. Speak to our team at Ecsponent about a retirement annuity for this purpose.

Which underlying investment funds can I choose?

You may select from a wide range of unit trust funds. The combination of your fund choices must comply with Regulation 28 of the Pension Funds Act. Regulation 28 currently limits equity exposure to 75% and international exposure to 30% of the value of the investment.

To simplify the investment decision, we highlight some of the funds we believe are cost-effective and ideal to grow and maintain your retirement benefits over the long term. All these funds are Regulation 28-compliant.

  • Ecsponent low equity fund
  • Ecsponent moderate equity fund
  • Ecsponent high equity fund

What is it going to cost me?

You will pay an ongoing administration fee which depends on the value of your investment. All fees are quoted, excluding VAT, as a percentage of assets under management on an annual basis.

Investments < R5m Investments R5m - R10m Investments > R10m
Administration 0.55% 0.50% 0.45%
Sponsor fee 0.20% 0.20% 0.20%

No fee is currently payable for legislative charges. Upon death, a fee may be raised to enable the administrator and sponsor to trace your dependents and allocate the death benefit payable to your dependents.

Disclosures

 

The Ecsponent Retirement Funds (“the Funds”) are registered with the Financial Sector Conduct Authority (“FSCA”) and approved by the South African Revenue Services (“SARS”). The Funds are administered by an administrator chosen by the Funds’ Trustees from time to time. The current benefit administrator of the Funds is D and D The Cycle (Pty) Ltd Reg. No. 2013/157477/07 (“The Cycle”). The Cycle is an approved fund administrator and authorised Financial Services Provider. The current investment options available to the members in the Funds are selected portfolios of Collective Investment Schemes in Securities (CISs), approved external funds and Personalised Share Portfolios (PSP) which are managed and administered by approved third party managers and administrators. CIS portfolios, pooled investments and PSP’s should be considered medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance.

 

This guide has been compiled to provide factual information on the product offered and does not constitute advice.

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