Employee Provident Fund (EPF) is a collection of funds that both the employer and the employee contribute every month. It is a scheme that provides financial support to all salaried individuals post-retirement.

EPF is a retirement benefit plan and aims to ensure a financially independent retirement.

Provident Fund Withdrawal PF money can be fully withdrawn only after retirement and not when working except under some conditions. If a person is unemployed, he can withdraw 75% of the PF deposit after one month of unemployment and the remaining 25% after two months. PF can be withdrawn 2 or 3 times on a non-refundable basis.

The amount you will get from your Provident Fund in South Africa depends on several factors:

Contributions: The amount you and your employer have contributed to the fund over time.

Investment Growth: The growth of your investment is based on the fund’s performance.

Vested and Non-Vested Portions: Any contributions made to your provident fund before the 1st of March 2021, including the growth thereon, are deemed to be the ‘vested’ portion of your provident fund and will not be subject to the 2/3rds rule. However, from the 1st of March 2021, provident fund members who are younger than 55 years of age will see any further contributions on or after 1 March, and the growth thereon, deemed as the ‘non-vested’ portion of their fund, the value of which will be subject to the 2/3rds rule upon retirement.

Age: If you are 55 years or older at the 1st of March 2021, you will not be subject to the new rules for provident funds, regardless of whether further contributions are made from the date the amendments came into force¹. This means you are allowed to withdraw the entire value of the fund as a lump sum, provided that any further contributions are made to the existing provident fund.

Practical examples of the new provident fund rules

Tax year 2024: Retirement & Death Benefits or Severance Benefits

Taxable income (R)	Rate of tax (R)
1 – 500 000	0% of taxable income
500 001 – 700 000	18% of taxable income above 500 000
700 001 – 1 050 000	36 000 + 27% of taxable income above 700 000
1 050 001 and above	130 500 + 36% of taxable income above 1 050 000

Mr. Smith is currently 55 years of age and has been a member of the ABC provident fund for the past 30 years. He plans to retire at the end of this year.

At retirement Mr. Smith’s provident fund is valued at R2,150,000. Under the new rules, he would still be able to withdraw the entire fund value as a lump sum, which would then be subject to tax as per the above table.  

Mr. Smith decides to push out his retirement age to 65. On the 1^st of March 2021, his provident fund is valued at R2,150,000 and he and his employer each contribute a monthly amount of R4,000 towards the ABC provident fund. At retirement, his estimated fund value is R5,378,352 assuming an 8% return per annum.

At retirement Mr. Smith will be able to withdraw the entire value as a lump sum, subject to tax, as he did not leave the ABC provident fund.

Mr. Smith still plans to retire at 65. On the 1st of March 2021, his ABC provident fund is valued as per the previous example. But instead of staying with ABC, he moves to XYZ provident fund where he also contributes R4,000 per month until his retirement.

Mr. Smith would be able entitled to withdraw the entire fund value of R4,641,689 he accumulated with ABC provident fund (the R2,150,000 plus growth) as a lump sum vested portion, again subject to tax.

His accumulated fund value with XYZ provident fund of R736,666, which would be classified as non-vested, would then be subject to annuitisation and he would only be able to withdraw 1/3rd of the fund value as a lump sum, with the remaining 2/3rds used to purchase an annuity.