The Stanlib Classic Preservation Fund is a robust retirement product designed to secure and grow your existing retirement savings. It requires a minimum lump sum investment of R25,000.00 to activate the account. This fund offers a choice between the Classic Preservation Pension Plan and the Classic Preservation Provident Plan, ensuring the protection and growth of your pension or provident funds.
Eligibility and Membership
To be eligible for the Stanlib Classic Preservation Fund, investors must be at least 18 years old. This makes it suitable for individuals who are resigning, being retrenched, or facing the closure of their retirement fund. By investing in this fund, you become a member of a large investment pool with over R22 billion in assets, giving you control over your investment and access to a variety of unit trusts.
Investment Features and Performance
The Stanlib Classic Preservation Fund does not guarantee returns, meaning the value of your investment may fluctuate. Despite this, the fund has shown significant growth over the years. For instance, in 2021, the fund increased by 4.1%, which was considered one of its worst performances due to the COVID-19 pandemic. However, by 2023, the fund had a 5-year average yield of 6.5%, demonstrating resilience and the ability to outperform the market in challenging economic conditions.
Key Features of the Stanlib Classic Preservation Fund
- Minimum Investment: A R25,000.00 minimum investment is required, sourced from existing retirement savings.
- Tax Efficiency: The fund offers tax-free returns on dividends and interest income from various unit trusts, which can be capitalized to boost future earnings.
- Flexible Fund Switching: Investors can switch between funds without incurring additional costs, allowing them to capitalize on market inefficiencies.
- Early Retirement Option: If disabled or incapacitated, investors can apply for early retirement and access their funds starting at age 55.
- Withdrawal Options: At age 55, policyholders can withdraw the entire amount, a portion, or choose not to withdraw from the preservation fund.
- Beneficiary Nomination: Investors can nominate beneficiaries who will receive the remaining fund value in case of the investor’s death.
Types of Preservation Plans
The Stanlib Classic Preservation Fund is available in two forms based on the source of funding:
- Classic Preservation Pension Fund: Preserves a pension fund.
- Classic Preservation Provident Plan: Preserves a provident fund.
Both plans allow fund access starting at age 55. For the provident fund, the policyholder can withdraw all or part of the cash as a lump sum and invest the remainder in a living annuity, or invest the entire amount in a living annuity. For the pension plan, up to one-third can be withdrawn, with the remainder invested in a living annuity.
Advantages of the Stanlib Classic Preservation Fund
- Accessibility: Available to anyone with a pension or provident fund.
- Flexibility: Options to reinvest or withdraw funds at retirement age.
- Variety of Investments: A wide range of unit trusts to choose from.
- Low Entry Point: Minimum investment requirement is relatively low at R25,000.00.
- Tax-Free Returns: Earnings from investments are tax-free.
- Cost-Free Switching: No fees for switching investments.
- Early Retirement: Provision for early retirement due to disability or incapacity.
- Estate Planning: Investments are not subject to estate duty and can be passed to beneficiaries.
- Protection from Creditors: Investments cannot be attached by creditors.
Disadvantages of the Stanlib Classic Preservation Fund
- Access Restrictions: Investments cannot be accessed before age 55.
- Market Risks: Investments can lose value due to market inefficiencies.
Stanlib Classic Preservation Provident Plan: 2024 Terms and Conditions
The Stanlib Classic Preservation Provident Plan allows disciplined saving and flexible investment choices through unit trust funds, model portfolios, and other options. Contributions can be made via transfers from an employer provident fund, another preservation provident fund, or proceeds from a divorce settlement.
Classification of Benefits
- Vested Benefit: Accumulated up to February 28, 2021, and may be taken as a lump sum at retirement.
- Non-vested Benefit: Contributions to various retirement funds made between specific dates, with only one-third withdrawable as cash at retirement.
- Savings Component: One-third of contributions made from September 1, 2024, can be withdrawn annually, taxed at the marginal tax rate.
- Retirement Component: Two-thirds of contributions made from September 1, 2024, must be used to purchase an annuity and cannot be withdrawn before retirement.
Withdrawal Conditions
- Pre-retirement Withdrawals: Allowed once from the combined Vested and Non-vested benefits, with specific rules for those transferring from another fund.
- Savings Component Withdrawals: Allowed annually, with a minimum withdrawal of R2,000.
- Retirement Component Withdrawals: Not allowed before retirement, except in cases of emigration.
Tax Implications
Pre-retirement withdrawals may be subject to income tax, with the Savings Component taxed at the marginal rate and other withdrawals taxed according to SARS lump sum tax tables. Emigration withdrawals are also subject to tax.
Product Suitability
This product is ideal for individuals saving for retirement within Regulation 28 limits. It is not intended for those seeking a mix of asset classes outside these limits.
Conclusion
The Stanlib Classic Preservation Fund is a valuable tool for those transitioning from a pension or provident fund. It offers flexibility, tax efficiency, and various investment options. However, potential investors should consider the implications of market fluctuations and consult a financial advisor before making investment decisions.
Investing in the Stanlib Classic Preservation Fund can be done online, making the process straightforward and accessible. This fund remains a strong option for those seeking to preserve and grow their retirement savings effectively.