What you must know about default annuities
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:
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.
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