Can I invest in another RA at 60?
AMoneyweb reader asked: I have reached retirement age (60 years) but intend to work until 65. I have two retirement annuities (RAs) which I will use to supplement my retirement income after 65. Could I invest in another RA at 60?
The answer:
The simple answer is yes. Administrators such as Ninety One, Wealth Foundry, Momentum and so on allow investors to start retirement annuity investments at any age. Retirement from these products can only be done from age 55 as per our current rules.
For many investors, retirement annuities weren’t always an attractive investment option due to the restrictions imposed on global allocations within these investments. These restrictions, known as Regulation 28, have been amended with the recent budget speech.
The new offshore allocation within these pre-retirement investments (retirement annuities, pension funds, provident funds, provident preservation and preservation funds) has been increased from 30% offshore and 10% African exposure to a total inclusive total of 45% offshore allocation.
Based on the long-term trajectory, having greater offshore equity exposure has been more beneficial for South African investors.
With the now increased offshore allowance within these pre-retirement investments, they become a more attractive investment option.
Benefits of investing in retirement annuities
Growth in your investment is not subject to tax.
Beneficiaries can be nominated on your investment, meaning that your estate duty liability is reduced upon death.
Creditor protection is applicable for the investment.
There are also other alternatives for you. Given your age, it also might be beneficial to you to invest in a tax-free savings account if you aren’t already utilising your full annual amount of R36 000. Combining this with a retirement annuity is tax-efficient, and both are good savings vehicles.
As with all investment decisions it is best to speak to a qualified and registered financial advisor.
Haumann is a certified financial planner at Brenthurst Wealth.