What you must know about de­fault an­nu­ities

Sunday Times - - Money -

From March next year, your re­tire­ment fund must pro­vide a de­fault an­nu­ity or pen­sion op­tion when you re­tire, one that the trus­tees deem suit­able for you. The de­fault op­tion can only have a choice of four un­der­ly­ing in­vest­ments and the trus­tees must take into ac­count the costs of the pen­sion.

Your re­tire­ment fund can of­fer this pen­sion from within the fund or out of fund. The dif­fer­ences are:

In-fund an­nu­ity

Your in­vest­ments must com­ply with reg­u­la­tion 28 of the Pen­sion Funds Act, which ef­fec­tively means you can­not in­vest more than 75% of your sav­ings in eq­ui­ties and listed prop­erty and you are lim­ited to in­vest­ing up to 30% of your sav­ings off­shore.

When you die, the trus­tees of the fund will make the fi­nal de­ci­sion on how to al­lo­cate any re­main­ing funds in your liv­ing an­nu­ity.


Your liv­ing an­nu­ity in­vest­ments do not need to com­ply with reg­u­la­tion 28.

You can nom­i­nate the ben­e­fi­cia­ries of any re­main­ing funds in your liv­ing an­nu­ity af­ter you die.

For more on the ad­vice you need and ques­tions you should ask, visit busi­nesslive.co.za/bt/money

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