Retirement funds allow you to access certain benefits in cash when you retire. If you are invested in more than one retirement fund, you have the option of taking a cash lump sum from each fund. You will need to invest the balance in a product that pays you an income, or "pension", in your retirement, which is called an annuity.
Your retirement fund account may consist of various components as per the two-pot retirement system. The following rules apply to each component at retirement:
If you are excluded from the two-pot retirement system, you will be able to access up to 100% of your benefit in cash, or use your benefit to purchase an annuity, when you retire from your provident or provident preservation fund.
More cash upfront means less to draw later
Remember that any amount taken in cash and spent at retirement will decrease how much you have to invest in an annuity, and therefore how much income you will receive in retirement from your annuity.
Pay off outstanding debt
Pay off your debts so that they will not need to be covered by your annuity income.
Save for emergencies
Build up a safety net for unexpected expenses. You can do this by investing a portion of your lump sum in a flexible investment product that allows you to access your money if you need to, such as a basic unit trust investment.
Supplement your income
Invest your lump sum in a flexible investment product that allows you to make regular withdrawals to supplement the retirement income you will receive.
A living annuity may be suitable when
- You want to have flexibility and control of your money.
- You want any money left over to go to your beneficiaries when you die.
- You are willing to take on the responsibility of making sure your money lasts.
A guaranteed annuity may be suitable when
- You want to get an income that is guaranteed to last for the rest of your life.
- You are comfortable not being able to leave money to your beneficiaries.
- You are comfortable not having the flexibility to transfer to another service provider or annuity type or to change your income over time.
| Fees and charges | Allan Gray Living Annuity | Just Lifetime Income Annuity |
|---|---|---|
|
Guarantee charge |
Not applicable |
|
|
Investment management fee |
Please refer to the Allan Gray Balanced Fund Factsheet |
Please refer to the Just Lifetime Income Annuity Factsheets |
|
Administration fee |
|
|
|
Advice fee agreed between you and your financial adviser |
|
|
**As at July 2024.
Important information about these numbers
- The drawdown rates do not guarantee that your money will last for the rest of your life. They have been calculated based on probabilities using historical market data. Your individual circumstances, such as your health and any other sources of income, are important factors to consider when choosing how much income to draw from your investment.
- A sustainable income, determined by your age and gender, is defined as the highest drawdown rate that aims but does not guarantee to provide an income that increases with inflation for as long as an investor is alive.
- Drawdowns are grouped in 5-year age buckets from ages 55 to 89 meaning that members aged 55-59 will be quoted the same rate.
- Where the option to provide for your partner is selected, the rate given is the lower of you and your partner’s individual rate, reduced by 0.5%.
- Drawdown rates are based on the latest Financial Sector Conduct Authority (FSCA) draft conduct standard. At the time of creating the calculator this conduct standard on sustainable income levels was not yet finalised and is therefore subject to change; the rates may be replaced once finalised.
- Estimated income assumes the investment is in Multi-Asset High Equity unit trusts with a minimum of 60% growth assets like equity and property exposure, for example, the Allan Gray Balanced Fund.
- The net of tax amount estimated is based only on the retirement lump sum indicated. The actual amount may differ based on your individual tax circumstances.
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If you have multiple sources of income, you must ensure that the correct tax rate* is being applied by your employer and/or annuity provider.
- Estimated income does not include the cost of financial advice, if applicable.
*Your employer and/or annuity provider will calculate tax as if your salary and/or annuity income payments are your only source of income, unless SARS instructs them otherwise. If you have multiple sources of income, you will need to ensure that the correct tax rate is being applied, taking your full tax liability into account, to avoid an unexpected tax bill when tax filing season arrives. Please consult your financial adviser or tax practitioner if you need help determining your appropriate tax rate.
Important information about these numbers
- Just has provided income rates as at April 2024 to serve as an estimation of the income that you can expect to receive if you invest in their guaranteed annuity.
- The Just rates are based on your income targeting an inflationary increase each year. These increases are based on the performance of the Allan Gray Balanced Fund and are not guaranteed to match inflation each year. While the increases are not guaranteed, your income will never decrease in nominal terms.
- Where the option to provide for your partner is selected, the rate provided assumes that upon your death, your partner will receive 75% of your total monthly income for the rest of their life.
- As the rates given are estimates, they are grouped in 5-year age buckets from ages 55 to 89 meaning members aged 55-59 will be quoted the same rate.
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If you have multiple sources of income, you must ensure that the correct tax rate* is being applied by your employer and/or annuity provider.
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The quoted rates will be updated when required.
*Your employer and/or annuity provider will calculate tax as if your salary and/or annuity income payments are your only source of income, unless SARS instructs them otherwise. If you have multiple sources of income, you will need to ensure that the correct tax rate is being applied, taking your full tax liability into account, to avoid an unexpected tax bill when tax filing season arrives. Please consult your financial adviser or tax practitioner if you need help determining your appropriate tax rate.
Information and content notice
The information and content of this publication/presentation is provided by Allan Gray as general information about the company and its products and services. Allan Gray does not guarantee the suitability or potential value of any information or particular investment source. The information provided is not intended to nor does it constitute financial, tax, legal, investment, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified financial adviser. Nothing contained in this publication/presentation constitutes a solicitation, recommendation, endorsement or offer by Allan Gray, but is merely an invitation to do business.
Allan Gray has taken and will continue to take care that all information provided, in so far as this is under its control, is true and correct. However, Allan Gray shall not be responsible for and therefore disclaims any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever, which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon any information provided.