Retirement annuities are designed to supplement retirement benefits from company pension funds or for self employed people wanting to plan for their retirement.
For people in their own businesses where earnings may be irregular, retirement annuities are an excellent way to plan for the future in that the contributions can easily be changed or stopped altogether for a period of time.
These funds restrict access to funds that have been invested until you reach the age of 55 if you are not incapacitated for any reason, however, as voluntary contributions, the tax benefits are available from the first payment. In the event that you are unable to work due to illness or injury on a permanent basis, withdrawals from the fund are allowed under the age of 55.
In general, retirement annuities are invested in unit trusts from some of the worlds top performing funds.
On retirement you are able to take a lump sum payment equal to 1/3 of the capital amount, the remaining 2/3 to be used to purchase income products or living annuities as an example. Discuss this aspect with your retirement planner and ensure that you fully understand the types of investments and realistic income you could expect from these funds.
Recent legislation has removed the compulsory retirement age of 70 and now you are able to remain part of the fund after the age of 70, until death. Upon your death, the funds would become part of your estate and distributed to your beneficiaries.
The Financial services industry is becoming increasingly regulated and offers low risk investments regulated by the SA Government to ensure low risk guaranteed returns, Get Free insurance and investment advice by requesting it here.