“retirement component” means a component established in terms of the rules of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund for a person who is a member of that fund: Provided that the rules of the fund provide that-

(a)     two-thirds of the total retirement contributions to a pension fund, provident fund or retirement annuity fund by or on behalf of that member on or after 1 September 2024 is allocated to this component: Provided that-

(i)      in determining the value of the contributions to this component an amount of charges and risk premiums deductible against such contributions must not be taken into account;

(ii)     in the case of funds with a defined benefit funding structure, the total value attributed to this component on or after 1 September 2024 is to be determined with reference to two-thirds of the member’s “pensionable service” as contemplated in the rules of that fund on or after 1 September 2024; and

(iii)     a fund with a defined benefit structure that is unable to allocate contributions as contemplated in paragraph (ii) may allocate contributions utilising a reasonable method of allocation as approved by the Financial Sector Conduct Authority;

(b)     payments or transfers from a similar component to a pension preservation fund or provident preservation fund by or on behalf of that member on or after 1 September 2024 is allocated to this component;

(c)     any amounts transferred from a similar component of any other pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund on or after 1 September 2024 is allocated to this component; and

(d)     the total value of the member’s interest in the retirement component 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 the member’s interest in the retirement component calculated together with two-thirds of the member’s interest in the vested component 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 this provision shall not apply to a “legacy retirement annuity policy” as defined in section 1 (that has been exempted from this provision, subject to the conditions that may be required by the Financial Sector Conduct Authority), a “beneficiary fund”, “unclaimed benefit fund” and “pensioner” as defined in section 1 of the Pension Funds Act, and any person who is or was a member of a provident fund or provident preservation fund and who was 55 years of age or older on 1 March 2021, unless such person has elected to contribute to the retirement component: Provided further that in determining the value of the member’s interest in the retirement component calculated together with two-thirds of the member’s interest in the vested component an amount calculated as follows must not be taken into account-

(i)      in the case of a person who is or was a member of a provident fund or provident preservation fund and who was 55 years of age or older on 1 March 2021 who has elected to contribute to the retirement component-

(aa)   two-thirds of the members contribution to the vested component in a provident fund or transfers to the vested component in a provident preservation fund on or after 1 September 2024;

(bb)   with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the vested component in the provident fund or provident preservation fund on or after 1 September 2024; and

(cc)   any fund return, as defined in the Pension Funds Act, in relation to the contribution or transfers contemplated in item (aa) or amounts credited contemplated in item (bb);

[Definition of “retirement component” added by section 1(1)(zF) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]