Allan Gray: Revised treatment of GEPF transfers to the Allan Gray Pension Preservation Fund

The Government Employees' Pension Fund (GEPF) has recently provided us with clarity regarding the maximum cash amounts an investor has access to before and at retirement for benefits transferred from the GEPF to the Allan Gray Pension Preservation Fund.

Members are now allowed a one-third withdrawal before retirement and a further third at retirement

Members who have transferred benefits from the GEPF to the Allan Gray Pension Preservation Fund will now be allowed to take up to a third of the market value as a withdrawal before retirement, and a further third of the market value as a cash portion at retirement. The current tax treatments for withdrawals before retirement and cash portions taken at retirement will still apply.

This new treatment will be applied to all existing Allan Gray Pension Preservation Fund accounts transferred from the GEPF, as well as all future transfers of GEPF benefits to the Allan Gray Pension Preservation Fund.

Background to the change

The Allan Gray Pension Preservation Fund allows a member to make a single, part or full withdrawal before retirement. At retirement, the member is allowed to take a further third of the market value as a cash lump sum, while the remaining benefit has to be transferred to a living annuity or used to purchase a guaranteed life annuity. If the market value at retirement of all of the member’s Allan Gray Pension Preservation Fund accounts is less than R247 500, no living or life annuity has to be purchased and the full benefit may be taken as a cash lump sum.

A member’s access to the benefit may be restricted if the transferring fund informs Allan Gray of any restrictions at the time of transfer. Previously, our interpretation of the GEPF transfer process was that members were restricted to taking a maximum of a third of the benefit in cash. The member could access this third as a pre-retirement withdrawal, take it as a cash lump sum when they retire, or withdraw less than a third before retirement and take the remaining value as a cash lump sum when they retire. Following the clarity received on this restriction, we have changed our process accordingly.

Our integrated wealthcare approach is based on your personal priorities and aspirations. This process is designed to give you a clear course of action for pursuing your goals that span various time horizons and life stages to empower you to do extraordinary things with your wealth, both now and in the future.

Regards,

Shane Thom, CFP® GTP(SA)™
Managing Partner: Integrated Wealthcare