Smartwoman by Sylvia Walker

Author:Sylvia Walker
Language: eng
Format: epub
Publisher: Penguin Random House South Africa
Published: 2017-07-26T04:00:00+00:00

The ‘portable pension fund’: Retirement annuities

A retirement annuity (RA) is a long-term savings plan specifically designed to allow you to save for retirement. The contributions are tax deductible up to certain limits and you cannot access the money until you are least 55. It is called a ‘portable pension fund’ because you own it, and not your employer. So, when you change jobs it is not affected, as it simply moves with you.

At retirement, you can withdraw up to one-third of the total value of your retirement annuity as a lump sum, with the balance paid in the form of a regular income (pension). One of the great advantages of a retirement annuity is that creditors cannot seize it in the event of insolvency, so it is a ‘safe’ way of investing if you have your own business. The money is also locked in: you cannot access it before retirement at age 55, which removes any temptation to spend it beforehand. You cannot surrender it, or take out a loan against it; if you stop paying premiums, it simply remains intact until you reach retirement age or age 55, whichever you prefer.

Premiums are also tax deductible, alongside pension and provident fund contributions, up to certain limits. So, there is an added bonus to saving with a retirement annuity, which we will discuss in more detail in Chapter 20.

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