A Retirement Annuity (RA) is a retirement fund in terms of both the Pensions Fund Act and the Income Tax Act. Any person can join the fund and make both lump sum and monthly contributions towards their retirement benefit. One can retire at 55 or later and take a third in cash and two thirds as an annuity when you retire.
Compelling benefits of having an ‘RA’ are:
- The tax refund on an ‘RA’, in addition to the returns, makes it an attractive investment opportunity as market returns has no tax liability
- Your contributions to pension, provident and an ‘RA’ is deductible but limited to the lower of R350 000 or 27.5% of taxable income
- A ‘RA’ is in your name even when offered by employers which allows you to change employers but keep the same annuity in place
- Contributions can be lumpsum or monthly depending on your preference Your money in a retirement annuity is protected from creditors
- Your savings in your ‘RA’ does not form part of your estate upon your death and therefore no estate duties are applicable
‘RA’ savings forms part of your money you can move abroad if you apply for financial emigration