A man came to see us a while ago with a retirement annuity he was quietly ashamed of. He had taken it out in his early thirties, on the advice of someone he no longer spoke to, and for the better part of two decades he had paid into it without ever quite looking at it. When we finally laid it out on the table, the picture was the one we see more often than the industry likes to admit: a fund charging him close to three percent a year, invested in a strategy that had not been competitive since before the financial crisis, wrapped in an old-generation policy that punished him for stopping. He had assumed, as most people do, that he was stuck with it. That the only way out was to stop contributing and let it sit there, a monument to a younger man’s first financial decision.
He was not stuck with it. Almost nobody is. And the way out has a deeply unglamorous name: a Section 14 transfer.
What a Section 14 transfer actually is
Section 14 of the Pension Funds Act governs the movement of your retirement savings from one approved fund to another without it ever passing through your hands. That last part is the whole point. Because the money never becomes yours along the way, the transfer is not a withdrawal, and a transfer that is not a withdrawal does not trigger tax. Your retirement annuity can move from a tired old fund to a modern, low-cost one, and the taxman treats it as a non-event. The capital simply arrives on the other side, intact, and carries on compounding as if nothing happened. Which, from a tax point of view, is exactly what happened.
This is what makes it quiet. There is no lump sum, no SARS directive that costs you a third of your savings, no resetting of the clock on your contributions. You do not lose your retirement-fund tax benefits. You do not surrender the protection these funds enjoy from creditors. You change the engine without selling the car.
It is the difference between fixing the fund and escaping it. Most people, not knowing the difference exists, do neither.
Your retirement annuity can move from a tired old fund to a modern one, and the taxman treats it as a non-event.
Why so few people use it
If the mechanism is this clean, the obvious question is why the country is full of people sitting in retirement funds they would never choose today.
Part of the answer is that nobody whose income depends on the old fund is going to tell you about the new one. A Section 14 transfer moves the asset, and with it the fees, away from the institution that has been collecting them. It is not in the interest of the party charging you three percent to explain how you might pay one. The silence around this is not an accident.
The rest of the answer is that the transfer is genuinely a little tedious, and tedium is a powerful deterrent. It requires paperwork on both sides, a transferring fund that is in no particular hurry to let you go, and a recognition-of-transfer process between the two funds. Moving from one retirement annuity to another no longer needs to go to the Financial Sector Conduct Authority for approval, and the rules here were simplified further in 2025. Even so, the regulator gives the funds up to 180 days to complete a transfer, and the whole thing has a way of drifting across several weeks. Nothing about it is difficult. But it is the kind of administrative friction that a busy person postpones for fifteen years, at a cost that quietly dwarfs the inconvenience.
The one thing to check before you move
There is, however, a real trap, and we would be doing you a disservice not to name it plainly.
Older retirement annuities, particularly the policy-based ones sold a couple of decades ago, often carry what the industry euphemistically calls a causal event charge: a penalty for stopping or transferring before the original maturity date. The law caps these penalties, and the cap has tightened over the years, but capped is not the same as zero. On an old enough policy, the charge to leave can run into a meaningful slice of the fund. That does not always make the transfer a bad idea. Often the savings on future fees recover the penalty within a few years, and you spend the next twenty in a far better place. But the sum has to be done honestly, in both directions, before you sign anything. Anyone who tells you to transfer without first quantifying the exit penalty is not actually doing the work.
This is the conversation we have most carefully. We pull the current fund’s terms, we establish the precise penalty to exit, we model the fees you would pay over your remaining horizon in the old fund against the new one, and only then do we decide whether moving is worth it. Sometimes it isn’t, and we say so. More often it is, and by a wider margin than the client expected.
What this asks of you
Three things, and we ask them gently of anyone who suspects they are in the wrong fund.
- That you actually look. Most bad retirement funds survive on not being examined. Find the annual cost, in rand and as a percentage, and find out what the money is invested in. If you cannot get a straight answer in a single page, that is itself the answer.
- That you separate the penalty from the principle. The exit charge is a number, and it can be weighed. The question is never simply whether there is a penalty, but whether the cost of leaving, paid once, beats the cost of staying, paid every year for the rest of your working life. Usually it does. Occasionally it does not. The only way to know is to do the arithmetic.
- That you let it be boring. A Section 14 transfer is not a dramatic act. It is a form, a wait, and a better fund on the far side. The reward for tolerating a few weeks of mild administrative dullness is, very often, years of fees you simply stop paying. That trade is one of the quietly best in personal finance.
None of this is exciting. It does not make for a good story at dinner. But the man with the fund he was ashamed of is now in a modern, low-cost retirement annuity, paying roughly a third of what he was, invested in something that suits the life he actually has. The transfer took eleven weeks and almost none of his attention. He told me afterwards that the only thing he regretted was not doing it a decade sooner.
That is the quiet way to fix a bad retirement fund. It is, more often than not, the only fixing it needs.
