A Fin24 reader nearing retirement needs to know if he can entry his retirement annuity now whereas nonetheless employed or solely after formally retiring. He asks: 

I can be 63 this 12 months and have an Previous Mutual Max Investments Retirement Annuity. I’m British and have labored in SA my whole life. I now want to retire and transfer to UK a 12 months or so from now.

Do I’ve to attend till the coverage matures? Do I’ve to formally retire earlier than I can draw what I feel is 1/three or can I accomplish that now while I’m nonetheless employed? How would the remaining 2/three be transferred to the UK?

Marlon Walters, a senior funding advisor at 10X Investments responds:

  • Do I’ve to attend till the coverage matures?

You’ll be able to elect to retire from this fund at any stage as you might be over the age of 55. With that mentioned, you could incur penalties for retiring earlier than the set maturity date. It will be prudent to contact them to ascertain if there could be any monetary implications do you have to retire earlier than the maturity date.

  • Do I’ve to formally retire earlier than I can draw what I feel is 1/three, or can I accomplish that now while I’m nonetheless employed?

Your retirement annuity shouldn’t be linked to your employer, or employment standing. Consequently, you’ll be able to ‘retire’ out of your retirement annuity, however nonetheless be employed, and proceed working. 

At retirement, you’ll be able to elect to take as much as one third of the market worth of your retirement annuity as a lump sum money fee if the overall worth is above R247 500. If the overall worth is under R247 500, you could withdraw the total quantity. The lump sum is subjected to tax as per the retirement tax desk under:

retirement tax table
  • How would the remaining 2/three be transferred to the UK?

The present laws doesn’t can help you switch the two/three instantly offshore to the UK. You’ll have to buy an annuity in South Africa and have the revenue paid right into a Blocked Rand checking account (non-resident checking account). A Blocked Rand checking account is a car through which all capital transfers out of South Africa should circulation for trade management functions. It facilitates and data the motion of funds out of South Africa into your offshore checking account.  

  • What are my funding choices to take a position the two/three?

You’ll be able to elect to spend money on a assured annuity or a residing annuity, or a mixture of the 2.  

  • What’s the distinction between a assured annuity and a residing annuity?

A assured annuity will give you an revenue, set at a pre-determined stage, for the remainder of your life (and your partner’s, if relevant), however your heirs gained’t inherit no matter is left in your loss of life. In different phrases, your capital dies with you.

Usually, additionally, don’t have any say over your preliminary revenue and no flexibility to make modifications when you’ve bought the product. There are numerous varieties of assured annuities e.g. people who present an revenue that will increase with inflation, these with a stage revenue, people who rely partially on market returns.

A residing annuity, alternatively, offers you with flexibility to decide on your revenue every year (topic to regulatory limits) and the place your cash is invested. Any capital remaining after your loss of life passes to your heirs. In trade for this flexibility, you tackle the danger that your funding returns are poor, which might imply that your future revenue fails to maintain up with inflation, and even that you simply outlive your financial savings. 

Compiled by Allison Jeftha. 

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