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Old Mutual preservation fund review 2022

Published by
Lethabo Ntsoane

A preservation fund can help you save for retirement when changing jobs or being laid off. One of the best ways to save for retirement is to invest in the Old Mutual preservation fund. Money from a company’s pension or provident fund can be transferred to the Old Mutual preservation fund and invested there.

Money saved in the Old Mutual preservation fund can then be invested for growth in one or more of the Old Mutual unit trusts. At retirement age, the Old Mutual preservation fund’s earnings and capital can be accessed. At retirement, the investor will have accumulated years of compounded savings.

The money in the Old Mutual preservation fund can be utilized for anything when you retire. The investor has complete control over how the funds in the fund are utilized, and they can be used to cover retirement expenditures. The investment can be retained for a longer period than the retirement age, allowing the investor to develop a retirement package suitable for his/her post-retirement needs.

Those who save with the Old Mutual preservation fund receive tax benefits. Since transfers to the account are tax-free, account holders will not be subject to capital gains tax. Withdrawals from the Old Mutual preservation fund, on the other hand, may be taxed.

Before you join the Old Mutual preservation fund, be sure to read the rest of this article for an in-depth look at the product.

Old Mutual preservation fund summary

The Old Mutual Preservation Fund is a savings account that allows members to invest in Old Mutual managed unit trusts. Those who desire to save their retirement savings from a pension or provident fund when they move jobs or are laid off can use the product.

A minimum commitment of R10,000.00 is required for the Old Mutual preservation fund, which must be paid in one lump sum. Since there is no contribution limit, any sum greater than R10,000.00 can be placed into the fund. By investing the money invested into one or more of the unit trusts operated by Old Mutual, the preservation fund has the potential to earn interest.

Individuals can invest in unit trusts such as:

  • Old Mutual balanced fund,
  • Old Mutual Equity Fund,
  • Old Mutual Flexible Fund,
  • Old Mutual Global Equity Fund,
  • Old Mutual Investors’ Fund,
  • Old Mutual Maximum Return Fund,
  • Old Mutual Moderate Balanced Fund,
  • Old Mutual Money Market Fund,
  • Old Mutual Real Income Fund, and
  • Old Mutual Stable Growth Fund.

One or more of the above-mentioned unit trusts can be purchased. The duration of an investment and the investor’s risk appetite will determine the amount of money to be earned. Investing involves a spectrum of risk levels, from low to high. The larger the risk, the greater the loss or return.

At the age of 55, the capital invested, as well as the interest received, will be accessible. After the age of 55, however, the money can be withdrawn at any time. Interest, dividends, and capital gains received by unit trusts are not subject to taxes. 

How the Old Mutual preservation fund works

To begin investing in the Old Mutual preservation fund, you must be transitioning from a pension or provident fund. The minimum amount that must be put into the Old Mutual preservation fund is R10,000.00. To get started with the Old Mutual preservation fund, you must first apply.

On the Old Mutual website, you can request a callback, and a consultant will contact you back to discuss your query. Alternatively, you may apply for the product at any Old Mutual branch throughout South Africa. The application is quick to complete and may be completed in as little as a few minutes if the relevant information is provided. 

You’ll need to make a contribution to the Old Mutual preservation fund if your application is approved. The money will be invested in one or more of the underlying assets of Old Mutual. However, the restrictions outlined in Regulation 28 of the Pension Funds Act must be followed while investing in unit trusts.

When you reach the age of 55, you will be able to access your investment. Alternatively, the investor might choose to keep the investment after retirement for a set amount of time. One-third of the money in the preservation fund can be taken as a lump amount at retirement. The remaining two-thirds of the preservation fund investment will have to be put into a living annuity.

Advantages of the Old Mutual preservation fund

  • There are 10 underlying instruments to choose from.
  • Transferring money from a pension or provident fund doesn’t incur taxes.
  • The minimum lump sum contribution of R10,000.00 is low when compared to the minimum contribution on a preservation fund from other issuers.
  • Some of the investments can be accessed at retirement as a lump sum, with the rest being invested in a living annuity for one to get a constant income at retirement.
  • The product cannot be attached should the investor be in a state of compromise with creditors.
  • Money can only be accessed at 55 years of age or older, giving the money invested the opportunity to grow.
  • 1 withdrawal is available before retirement.
  • Earnings for this investment are mainly controlled by where an investor places his or her investment.
  • Regulation 28 of the Pension Funds Act provides a safety net for asset exposure.
  • Investors can switch from one unit trust to another at any time during the investment.

Disadvantages of the Old Mutual preservation fund

  • If the underlying instruments in which the money is invested perform poorly, the money invested may be lost.
  • If you invest in the Old Mutual preservation fund, your money is not safeguarded if you divorce your ex-spouse.
  • There are no regular or ad hoc payments to the Old Mutual preservation fund because a contribution can only be made once.
  • Withdrawals made before the maturity date are taxed.

Conclusion

The Old Mutual Preservation Fund can assist people with money from a provident or pension fund in increasing their savings before they reach retirement age. Old Mutual’s award-winning unit trusts assist individuals in building their retirement portfolios. Regulation 28 also acts as a safety net for investors, reducing the danger to their retirement fund.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted at lethabo@rateweb.co.za

Published by
Lethabo Ntsoane
Tags: Old Mutual
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