“provident fund” means—
(a) any provident fund established by law;
(b) any provident fund established for the benefit of the employees of any municipality or of any local authority (as defined in the definition of “local authority” in this section prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006 (Act 20 of 2006), that was established prior to the date that section so came into operation); or
(c) any fund contemplated in subparagraph (b), which includes as members employees of any municipal entity created in accordance with the provisions of the Municipal Systems Act, 2000 (Act 32 of 2000), over which one or more municipalities or local authorities (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) exercise ownership control as contemplated by that Act, where such fund was established—
(aa) on or before 14 November 2000, and such employees were employees of a local authority (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) immediately prior to becoming employees of such municipal entity; or
(bb) after 14 November 2000, and such fund has been approved by the Commissioner subject to such limitations, conditions and requirements as contemplated in paragraph (c) of the definition of “provident fund”; and
(d) any fund (other than a pension fund, pension preservation fund, provident preservation fund, benefit fund or retirement annuity fund) which is approved by the Commissioner in respect of the year of assessment in question and, in the case of any such fund established on or after 1 July 1986, is registered under the provisions of the Pension Funds Act:
Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve a fund in respect of any year of assessment unless he is in respect of that year of assessment satisfied-
(i) that the fund is a permanent fund bona fide established solely for the purpose of providing benefits for employees on retirement date or solely for the purpose of providing benefits for the dependants or nominees of deceased employees or deceased former employees or solely for a combination of such purposes or mainly for the said purpose and also for the purpose of providing any benefit contemplated in paragraph 2C of the Second Schedule or section 15A or 15E of the Pension Funds Act; and
[Paragraph (i) (previously paragraph (a)) substituted by section 2(f) of Act 21 of 1995, by section 4(1)(s) of Act 60 of 2008, by section 4(1)(zN) of Act 31 of 2013, by section 2(1)(h) of Act 17 of 2017 and by section 75(1) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]
(ii) that the rules of the fund provide—
(aa) that all annual contributions of a recurrent nature to the fund shall be in accordance with specified scales;
(bb) that membership of the fund throughout the period of employment shall be a condition of the employment by the employer of all persons of the class or classes specified therein who enter the employment of the employer on or after the date upon which-
(a) the fund comes into operation; or
(b) the employer becomes a participant in that fund;
(cc) that person who immediately prior to the said date were employed by the employer and who on the said date fall within the said class or classes may, on application made, be permitted to become members of the fund on such conditions as may be specified in the rules;
(dd) that not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity), a combination of annuities (including a combination of methods of paying the annuity) or a combination of types of annuities except where two-thirds of the total value does not exceed R165 000, where the employee is deceased or where the employee elects to transfer the retirement interest to a pension preservation fund, provident preservation fund or a retirement annuity fund: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account-
(a) in the case of a person who is or was a member of a provident fund or provident preservation fund and who is or was 55 years of age or older on 1 March 2021-
(AA) any amount contributed to a provident fund or transferred to provident preservation fund prior to, on and after 1 March 2021 of which that person is or was a member on 1 March 2021;
(BB) with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on and after 1 March 2021; and
(CC) any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (AA) or amounts credited contemplated in subparagraph (BB);
[Subparagraph (CC) substituted by section 1(1)(h) of Act 17 of 2023 effective on 1 March, 2022 and is applicable in respect of years of assessment commencing on or after that date]
(b) in any other case of a person who is or was a member of a provident fund or provident preservation fund on 1 March 2021-
(AA) any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021;
(BB) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021; and
(CC) any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (AA) or amounts credited contemplated in subparagraph (BB);
[Subparagraph (CC) substituted by section 1(1)(i) of Act 17 of 2023 effective on 1 March, 2022 and is applicable in respect of years of assessment commencing on or after that date]
reduced proportionally by an amount permitted in terms of the Pension Funds Act to be deducted from the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on and after 1 March 2021: Provided further that in the case where the remaining balance is utilised to provide or purchase more than one annuity, the amount utilised to provide or purchase each annuity must exceed R165 000;
[Subparagraph (dd) substituted by section 4(1)(i) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of annuities purchased on or after that date]
(ee) that the employee may elect to transfer the withdrawal interest to a pension fund established by the same employer or a pension fund in which that employer participates;
(ff) that a partner of a partnership is regarded as an employee of the partnership; and
(gg) that an employee who has transferred a retirement interest in terms of paragraphs 2(1)(c) and 6A(d) of the Second Schedule to this fund shall not be entitled to payment of a withdrawal benefit as contemplated in paragraph 2(1)(b)(ii) of the Second Schedule in respect of that transferred amount; and
[Subparagraph (gg) added by section 1(1)(j) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]
[Paragraph (ii) (previously paragraph (b)) substituted by section 2(1)(f) of Act 94 of 1983 and by section 1(1)(p) of Act 23 of 2018, amended by section 1(1)(q) of Act 23 of 2018 and substituted by section 2(1)(e) of Act 34 of 2019 and by section 1(1)(c) of Act 2 of 2016, as substituted by section 97(1)(a) of Act 17 of 2017, by section 110(1)(a) of Act 23 of 2018 and by section 75(1) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]
(iii) that the rules of the fund have been complied with:
[Paragraph (iii) (previously paragraph (c)) substituted by section 1(1)(c) of Act 2 of 2016 and substituted by section 97(1)(a) of Act 17 of 2017, by section 110(1)(a) of Act 23 of 2018 and by section 75(1) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]
Provided further that a fund contemplated in paragraph (i) of the further proviso to the definition of “provident preservation fund” which is deemed to be approved or which is approved in terms of that definition or which fails to submit its rules as required by that paragraph is deemed effective on the earlier of the date of the deemed approval or 30 September 2010 to be a fund which is not approved in terms of this definition: Provided further that the Commissioner may recognise a fund contemplated in paragraph (a), (b) or (c) in respect of any year of assessment if the Commissioner is satisfied that the rules of the fund provide that in determining the value of retirement interest an amount calculated as follows must not be taken into account-
(i) in the case of a person who was a member of a provident fund or a provident preservation fund and who was 55 years of age or older on 1 March 2021-
(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to, on or after 1 March 2021 of which that person was a member on 1 March 2021;
(bb) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021; and
(cc) where applicable, any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (aa) or amounts credited contemplated in subparagraph (bb); or
(ii) in any other case of a person who was a member of a provident fund or a provident preservation fund on 1 March 2021-
(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021;
(bb) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021; and
(cc) where applicable, any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (aa) or amounts credited contemplated in subparagraph (bb),
where applicable, reduced proportionally by any amount permitted to be deducted in terms of the Pension Funds Act from the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021;
[Definition of “provident fund” amended by section 2(1)(d) of Act 65 of 1986, by section 4(1)(r) and (t) of Act 60 of 2008, by section 6(1)(z) of Act 7 of 2010, by section 4(1)(zM) of Act 31 of 2013, by section 3(1)(u) of Act 25 of 2015(as substituted by section 74(1)(d) of Act 23 of 2020) and by section 1(1)(j) of Act 20 of 2022 with effect from 1 March, 2023 and applicable in respect of years of assessment commencing on or after that date]