Answer to a question from a reader

Can I withdraw my entire pension from my preservation fund if I have not yet retired?

The short answer

Yes, you can make a full or partial withdrawal before retirement, but you can only do so once.

The whole question

Dear Athalie

My pension has been sitting in a preservation fund since my retrenchment in 2020. There is about R1.5-million. Can I withdraw the whole amount so I can start a business? What amount would I end up with after tax?

The long answer

Yes, you can withdraw the whole amount if it is before retirement, but you are only allowed to make one withdrawal from the preservation fund. You can also make a partial withdrawal but you can only make one withdrawal.

Your benefit will be taxed as a lump sum withdrawal in terms of the Income Tax Act.

These are the SARS figures for how a lump sum withdrawal will be taxed in the 2025 tax year (1 March 2024 – 28 February 2025) which SARS says are unchanged from the 2024 tax year:



1 – 27 500

0% of taxable income

27 501 – 726 000

18% of taxable income above 27 500

726 001 – 1 089 000

125 730 + 27% of taxable income above 726 000

1 089 001 and above

223 740 + 36% of taxable income above 1 089 000

If you are registered on e-filing with SARS, you can use this SARS tax calculator to get the exact figure that applies to you.

The Old Mutual Superfund urges members to preserve their funds until they retire, when they would get a larger tax-free amount, but you are allowed to withdraw your funds from the preservation fund.

Wishing you the best,

Answered on June 3, 2024, 1:06 p.m.

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Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.