WHEN YOU CAN NO LONGER FIND A JOB?

CityPress - - Business -

KGAMI WRITES:

Ire­cently lost my job and now that I am 50 years old, my chance of get­ting an­other job is very slim. I would like to know what hap­pens to my re­tire­ment an­nu­ity (RA). Will I lose all the money I paid in? Will my money still grow and will I be penalised for not con­tribut­ing?

CRAIG SHER,

What hap­pens to your RA, do you lose all the money paid? The RA is your ac­cu­mu­lated sav­ings, so the amount will just stay in­vested un­til you are able to start with­draw­ing the pro­ceeds. This can hap­pen legally from age 55 or later (or on ear­lier dis­abil­ity) when the money is trans­ferred to an an­nu­ity to pro­vide an in­come for you in re­tire­ment.

The RA value will grow in line with the type of in­vest­ments you choose. Do your ben­e­fits get penalised or are you still go­ing to have your ben­e­fits?

The ben­e­fits re­main yours. There are struc­tures across the in­dus­try where there may be a fee that is levied against your built-up RA fund for stop­ping your reg­u­lar con­tri­bu­tions if you had orig­i­nally con­tracted to keep them go­ing un­til your re­tire­ment date.

Usu­ally the rea­son for this is be­cause the com­pany may have paid com­mis­sion to your fi­nan­cial ad­viser based on the length of time you planned to con­trib­ute and stay in­vested.

Based on your planned in­vest­ment term, the com­pany can af­ford to pay this to your ad­viser be­cause of the fees it ex­pects to earn.

If you now change this and con­trib­ute for a shorter pe­riod or con­trib­ute less, then there could be a fee against your fund in or­der for the com­pany to re­cover its ini­tial out­lay. Must you no­tify the com­pany that you are out of job and bat­tling to find an­other job?

If you are un­able to make your monthly pay­ments, you must ask for the debit or­der to be stopped so that you don’t have bounced debit or­ders.

Some RA poli­cies in­clude re­trench­ment pro­tec­tion, which will pay your pre­mi­ums for a few months. In that case, it is im­por­tant to in­form them if you have been for­mally re­trenched. If you get a new job, do you con­tinue with the ex­ist­ing RA or do you have to start a new RA?

De­pend­ing on the struc­ture of RA that you chose, there may be dif­fer­ent rules on stop­ping and start­ing your con­tri­bu­tions up again. Gen­er­ally, you can con­tinue in the same RA.

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