New Retirement Annuity

A Retirement Annuity is an investment vehicle designed to provide you or your dependants with compulsory retirement proceeds in a tax-efficient manner.  Your contributions are invested in investment fund portfolio, chosen according to your risk profile, which is available at your retirement age to purchase an annuity which is payable to the you or your dependants on a monthly basis.

How does a retirement annuity product work?

You make regular contributions towards a retirement annuity. You receive a tax advantage – current legislation allows you to deduct a portion, or even all, of your contributions to a retirement annuity from your taxable income, subject to certain limits. Your investment cannot be seized by your creditors. So your retirement savings are safe. Your contributions are invested in investment funds of your choice (chosen according to your risk profile), which grows over time through returns earned on the investment funds. You can retire at any age from age 55. When you retire, you will receive a retirement benefit. Up to one-third of your benefit can be taken in cash, while the rest must be reinvested and used to pay you a regular monthly income (annuity / pension) in your retirement years. Myths Busted! 

Myths about Retirement Annuities:

  It is a disadvantage that you only receive 1/3 in cash and that the remaining 2/3 must be used to purchase an annuity! A retirement annuity is legislated by pension fund rules and the objective of a pension fund is to provide an annuity/pension income when you retire! The 2/3 is a forced way to provide an annuity- or pension income at retirement and in return you will receive numerous benefits for investing in a retirement annuity compared to another product that returns a lump sum! If your objective is retirement income, a retirement annuity forms and integral part of your provision. If your objective is saving for a different goal where your need is a lump sum, then yes, the retirement annuity will most probably not be the best vehicle!   There are better ways or products to save for your retirement! If you consider the financial benefits received as a result of the tax concessions you receive for investing in a retirement annuity that ensures an increased return compared to other investment vehicles and the protection enjoyed under regulation 28 ensuring more prudent investing by investment managers, you will have to invest in very risky investments to equal or beat returns on a retirement annuity. Retirement annuities should be part of your holistic retirement planning process! Company X delivers better returns on investments than Company Y if you compare returns on your savings! There are too much variables to consider when comparing returns received on investments with different product providers that it is almost impossible and very unfair to make this statement! If the financial advisor follows the correct financial planning process to find the correctly aligned risk strategy form you, the underlying investment fund composition should be the same at different companies. If you invest at different companies in similar funds the proceeds should not differ too much. The most important difference will be the initial and ongoing cost in the product which could make a significant difference on the return you receive! You should ask questions about the costs charged during the term and how much the negotiable advisory fee will be. Firstly, yes, advisor fees are negotiable (does the fee charged justify the service delivered) and secondly look for the term RIY in your quote. RIY stands for ‘Reduction in Yield’ and in layman’s terms means by which percentage the real returns will adjusted to cover for the costs charged!        Costs is very high when investing in a retirement annuity vehicle! This statement is true for retirement annuities sold in years gone by but luckily authorities have implemented procedures which forced the product providers to develop new products (The New Generation retirement annuities) that offer much more value for money. All the products sold on this website are supplied by big brand product providers offering new generation retirement annuities that complies with the new requirements required by legislation and offers real value for money!
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Retirement Annuity

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Sanlam Cumulus Echo Retirement Annuity
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