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Are you retiring from a Pension Fund, Preservation Fund, Provident Funds or Retirement Annuities?

Depending on the type of retirement fund you belong to, you may withdraw up to one third of your total retirement benefits as a cash lump sum (a portion of which could be tax free), with the remainder you have to buy a pension.

Pension options for you to consider:

Living Annuity (Investment Linked Life Annuity)

Allan Gray Fund Managers (www.allangray.co.za) describes a Living Annuity as:

"At retirement a living annuity is purchased with the pension benefits originating from your pension, provident, preservation or retirement annuity fund.

The money in your living annuity can be invested in one or a combination of unit trust funds.

A living annuity provides you with a regular income, which is funded by growth on capital and income from interest and dividends.

Legislation requires that you withdraw between 2.5% and 17.5% annually of the capital in your living annuity."

You can purchase a Living Annuity through a Linked Investment Service Provider (LISP).

The advantages of a LISP are the ability to invest across a wide range of management companies through one service provider. The second is the ability to switch cheaply from one fund to another across the industry. In the current low inflation/interest economic cycle total fees (platform, adviser and fund manager fees; initial and annual) is a very important consideration.

LISP companies we use

  • Coronation Fund Managers
  • Investec Asset Management
  • Allan Gray Fund Managers
  • Galaxy (Old Mutual)
  • Sanlam Personal Portfolios (Now Glacier)
  • Stanlib
  • Absa Investment Managers (Aims)
  • Momentum Wealth

Benefits:

  • Manage income level
  • Capital growth possible
  • Manage underlying investments
  • Transfer benefits at death

Risks:

  • Investment risk with investor
  • Risk of living too long

Conventional Life Annuity

Sanlam Personal Portfolios‘ (now Glacier) describes a Conventional Annuity:

"A Conventional Annuity*, which provides guaranteed income for life, offers further options. You can:

  • select an income payment term to guarantee income for 5, 10 or 15 years from inception. Should you die during a guaranteed term, income is paid for the remainder of the term;
  • opt for income to automatically increase annually to counter the effects of inflation; and
  • request life-long income for your spouse or other dependent.

*Please note:
With a conventional annuity, income is set on purchase date. It is important to take into account future income requirements, as no changes are permitted to your selections in future. Options such as automatic annual income increases, guaranteed income term and income for spouse are taken into account when income is determined."

Some of the product providers used (Life Companies):

  • Sanlam
  • Old Mutual
  • Momentum
  • Liberty

Benefits:

  • Guaranteed income
  • Level or escalating income
  • Single or joint life
  • Guaranteed terms
  • Investment risk with life assurer

Risks:

  • Low interest environment– locked in
  • Capital lost at death
  • Inflation erodes income
  • Choice is for life

For online advice* on Life Annuities and/or Living Annuities,
please complete the form below.

*We offer comprehensive investment advisory services for a Fee-based compensation and not commission.

The advantages are, among other things, substantial savings on commission/fees and objective independent advice. Full disclosure and details will be provided.

Fill in this short form

If you are interested in the Living Annuities, or would like some more advice on your options, fill in this quick form to have a professional consultant contact you!


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