preservation funds

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LifeCycle

PRESERVATION FUNDS

What are the LifeCyclePreservation Pension & Preservation Provident Funds?

The LifeCycle Preservation Funds (“the Funds”) are vehicles which are suitable if you have left an employer because of resignation or retrenchment and you wish to preserve the benefit that you have accumulated within your employer’s retirement fund in a tax-ecient manner. The Funds are legal entities which are each managed by a Board of Trustees who are appointed to control and oversee their operations.

Product Summary

If you transfer your benefit from an employer fund into a LifeCycle Preservation Fund then the benefit you will be able to access at retirement (from age 55) will be an accumulation of the transferred benefit(s) plus the investment returns achieved on your investment choice, less any fees and charges. You are not allowed to make regular contributions to a preservation fund but may transfer in benefits that have been accumulated in your previous employers’ retirement funds.

Product Summary

There are two types of preservation fund: pension and provident. Benefits from an employer pension fund can only be transferred to preservation pension funds; benefits from an employer provident fund can be transferred to a preservation provident fund.
The two types of preservation funds dier in terms of the amount of cash (commutation) you can take at retirement. Within a preservation pension fund, you will be entitled to take a maximum of one third of your benefit as a cash lump-sum whilst within a preservation provident fund you will be entitled to take all of the benefit as a cash lump-sum. In both cases, a portion of the lump-sum will be tax free.
The portion of your retirement benefit that is not commuted (taken as cash) must be utilised to purchase an annuity which will provide you with an income during retirement.
You may also transfer your existing preservation fund to a LifeCycle Preservation Fund and there will be no penalties should you wish to transfer your preservation fund from LifeCycle to another provider.

In the event of your death, the trustees will need to decide on how to apportion your accumulated investment value. This decision is made at the trustees’ discretion, based on the needs of your dependents and nominated beneficiaries.
Important to note
The Lifecycle Retirement Annuity Fund can however accept regular contributions and you open an account in the LifeCycle Retirement Annuity Fund at no cost - refer to the brochure for more details.

Why, How Much and How?

Why should I choose a LifeCycle Preservation Fund?

The LifeCycle Preservation Funds are tax-efficient, low cost, flexible preservation products which are easy to understand. The LifeCycle Preservation Funds will give you access to a range of investment options with exposure to all the relevant asset classes necessary to diversify your retirement benefit.

Within a preservation fund, the income, capital gains and dividends generated from the investments are exempt from taxation and transfers into the preservation fund from an employer fund are exempt from tax, provided that you do not take any cash withdrawals.

The LifeCycle Preservation Funds allow you to take one partial or full withdrawal per fund before retirement from the fund. There is no restriction on the amount you can withdraw from your pension or provident preservation fund but the tax rates that apply are more punitive than on commutations at retirement. The withdrawal is subject to the conditions that may have been imposed by the transferring fund.

You can retire from the fund at any time after reaching age 55.

What is it going to cost me?

You will pay an on-going administration fee which depends on the size of your investment. All fees are quoted as a percentage of assets under management on an annual basis.

The on-going administration fee includes web access. The Fund Expense fee comprises the fees applicable to the operation of the fund and include but is not limited to fees such as audit, FSB levies, actuarial and trustee expenses. The investment management costs are shown in the relevant Fund fact sheet.

LifeCycle do not charge initial fees when you become a member of the fund or switching fees should you decide to switch underlying investment options.

What do I need to do to get started?

  1. Request a quotation by sending a mail to lifecycle@thecycle.co.za
  2. Complete the LifeCycle Preservation Funds application form
  3. Compile the following supporting documentation:
    • ID document containing a photo, full names, date of birth and ID number, valid passport or a valid driver’s license
    • A document less than 3 months old containing residential address that is a utility bill, bank statement, rates account or tax invoice
    • Proof of banking details
    • Proof of tax number
  4. Send the completed application form and supporting documentation to the administrator:
    • Fax: 071 628 9722
    • Email: lifecycle@thecycle.co.za

What happens after I sign up?

    The administrator of the fund will provide you with the following:
  1. A transaction confirmation statement and a policy document
  2. Provide you with online access
  3. Regular benefit statements

How can I get help?

If any of the above is not clear, you can obtain further information from LifeCycle:

  • Phone: 083 630 4359
  • Email: lifecycle@thecycle.co.za
  • Website: www.thecycle.co.za

Additional Resources

Disclosures

D and D The Cycle Pty(Ltd)

13B Administrator 24/767
Authorised Financial Services Provider
FSP no: 45863

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