Retirement Insights | 1 min read

Investing in a retirement annuity (RA) is wise

Encourage your RA clients to add a lump sum to their RA before the end of the tax year to reduce tax.

It helps to secure a comfortable retirement

  • It gives your retirement savings plan a kickstart. 
    If you invest in an RA as well as your employer retirement fund, you create a larger pot of retirement savings to secure a better income during retirement.
  • It provides an opportunity for capital growth. 
    An RA offers you the opportunity to invest in a wide range of funds, risk-profiled solutions and s.  You select the underlying investments in accordance with the amount of investment risk you’re willing to take on. 
  • It’s affordable. 
    A small monthly investment can make a big difference in your retirement savings outcome years from now. 
  • Your savings are protected from creditors. 
    If you are in the process of insolvency, your retirement annuity investment is protected from creditors – they won’t be able to take from your savings. 
  • An RA encourages disciplined savings for your retirement. 
    You can’t touch the investment until you are at least 55 years old.
  • At retirement, you can seamlessly transfer your savings to one of our retirement income solutions, without exiting the markets. 

It reduces tax

  • Contributions to retirement funds are tax deductible, up to the lesser of:
    • R350 000 or
    • 27.5% of the higher of your
      • remuneration as defined in the 4th Schedule, or
      • taxable income including taxable capital gains before any deductions under Section 11F itself and 18A, or
    • Your taxable income before the Section 11F and 18A deductions and also before inclusion of taxable capital gains.
  • Excess contributions that did not rank for deduction, may be carried forward to the following tax year, subject to limitations.
  • Earnings inside a retirement fund are protected from taxes, including capital gains.
Glacier Financial Solutions (Pty) Ltd and Sanlam Life Insurance Ltd are licensed financial services providers.

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