What Is A Pension Fund?
If you want to join a pension fund you will only be able to do so through a firm which employs you.
They select the assets that will be included in the fund.
Designated trustees manage your money in a pension fund.
Pension fund contributions (both your own and your employer’s) are tax deductible up to a specific amount.
The Difference Between a Pension Fund And A Provident Fund Explained :
A pension fund is a retirement plan that your employer and you contribute to regularly (usually monthly).
You may take up to one-third of your benefit in cash when you retire, and the remaining two-thirds must be invested in an income annuity.
A provident fund is like a pension fund in that it is a type of retirement plan.
However, if you resigned or retired before March 2021, you were able to accept the whole sum as cash.
You wouldn’t have to invest in an annuity.
Provident funds are now more comparable to pension funds as a result of the retirement reforms implemented on March 1, 2021.
The following is now applicable :
- Members of the fund must accept a third of their benefit in a lump payment.
- They must utilize the remaining two-thirds to acquire a pension that pays them a regular monthly income.
What Is A Retirement Annuity (RA)?
You pay monthly contributions to a retirement annuity (RA) as well, generally through debit order, although this is done independently of your employer.
You can invest in whichever funds you like within the parameters established by retirement fund legislation.
These are known as Regulation 28 funds.