Answer to a question from a reader

What will happen to my provident fund if I am sent to prison?

The short answer

If you are sent to prison, you cannot work and so your employer will dismiss you or take it that you have resigned.

The long answer

This means that you will be paid withdrawal benefits, which is the money you are paid if you leave work through being dismissed or resigning before you are due to retire. The withdrawal benefit will not be as much as you would get if you retired, but you are still entitled to the payout. Each provident fund will have its own rules about exactly how much you get if you resign or are dismissed. But the money that is reflected in your latest benefit statement belongs to you regardless of whether you are dismissed or you resign. 

If you cash it in, it will be taxed according to the withdrawal lump sum tax table. The first R22,500 is paid out tax free. But if you don’t claim your provident fund within 24 months, it will be seen as an unclaimed benefit and the provident fund will be allowed to transfer your benefit to an unclaimed benefits fund. 

Wishing you the best,

Answered on Jan. 17, 2022, 12:38 p.m.

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Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.