Best Insurance Retirement Annuity in South Africa

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Few insurance companies in South Africa that offers retirement annuities for people who are planning to save to receive lump sum amount upon retirement. Here we have a list of best insurance companies to approach for annuities in South Africa in case you want to secure your future.

Old Mutual

Old Mutual is definitely a company to contact for your retirement package. The company has excellent reputation in South Africa due to its solid investment decisions.

When applying for retirement annuities at Old Mutual South Africa, you have two main options, Unit Trust Annuities and retirement annuity fund.

Retirement Annuity Fund

Old Mutual Unit Trusts Retirement Annuity Fund (OMUTRAF) is a unit trust-linked retirement annuity that enables you to invest in Old Mutual unit trusts for just R500 per month.

Features and Benefits

  • Investment minimum just R500 per month.
  • Invest a lump sum, make regular payments on a monthly basis, make ad hoc payments or opt for all three, with no penalties.
  • Access to the full range of Old Mutual’s unit trust funds.
  • Structure your retirement portfolio to meet your personal retirement needs.
  • Access your portfolio 24/7 in our secure online environment, where you can manage your investment at any time.
  • Switch all or part of your portfolio to another of Old Mutual’s unit trusts.
  • Retirement annuity contributions are tax deductible.
  • Any capital appreciation in the value of your units is currently tax free*.
  • Option to invest online or through your adviser or broker.

* Tax

Saving for your retirement not only makes good future sense but a portion of your contributions are also tax deductible:

  • From 1 March 2016, all members who contribute towards a retirement fund (pension, provident fund or retirement annuity), will qualify for a tax deduction on contributions up to 27.5% of the greater of remuneration or taxable income. This rate will apply to the combination of contributions made to a member’s pension, provident and retirement annuity funds.
  • The deduction above will be capped at R350 000 per year which means, for individuals earning more than R 1.27 million, there will now be a cap as to how much of their retirement contributions are tax deductible.
  • Contributions which employers make into retirement funds will now be seen as a fringe benefit and will be taxed in the hands of the member – this means that these contributions will be treated as if they were made by the member and will be included as part of the member’s tax deductible contributions.

Hollard

Hollard is another company to approach for retirement policy.

The advantage of this company is their ability to guarantee safety of your funds as they invest it in profitable ventures. Annuity funds policy provided by the company is:

Hollard Retirement Annuity Plan

A tax efficient savings vehicle for retirement

The Hollard Retirement Annuity Plan provides a tax-efficient method for you to save for retirement as an alternative to or in addition to saving via an employer pension or provident fund. You can contribute to your investment whenever you choose to and can invest via a monthly debit order investment starting at as little as R500 per month. Contributions are tax deductible up to the limits as specified in legislation.

You are offered a selection of carefully selected investment portfolios to invest into, and you are able to change this selection whenever you wish to.

The Fund’s registered name is “The Hollard Retirement Annuity Fund” (Registration Number 12/8/38099) and is registered in terms of the Pension Fund Act.

Features and Benefits of our Retirement Annuity Plan

Features and Benefits Product Details

Minimum Investment

The minimum amount required to open an Investment Account is R50, 000. The minimum recurring monthly debit order amount is R500.

Tax Implications         

Income tax will be deducted from any benefit taken in cash before it is paid out on retirement or death, in accordance with Income tax legislation. The investment is not subject to Capital Gains tax, Interest Income tax or Dividends tax.

Death Benefits   

Your Retirement Annuity investment does not form part of your estate and will not be governed by your last will and testament. In accordance with Section 37 of the Pension Funds Act, the Trustees of the Retirement Annuity Fund have full discretion to award death benefits as they feel appropriate. Dependents will be given preference when allocating the Benefit in accordance with legislation, after which nominated beneficiaries and your estate will be considered. The benefit due on the death of the investor is the value of the investment account at the time of processing the death claim, less any fees and charges. Each party who has been awarded a portion of the death benefit will receive it in one of the following ways:

The purchase of a compulsory annuity from a registered Long-term insurer.

A cash lump sum pay-out.

A combination of a compulsory annuity purchase and a cash pay-out.

Any benefits taken in cash will be subject to Income tax.

Access to Capital         

You may not withdraw from the investment until retirement, except in the following instances in which a full withdrawal can be requested, subject to legislative requirements and product rules:

You have officially emigrated in the records of the South African Reserve Bank.

The value of your Investment Account is less than the current legislated minimum amount of R7, 000, which may be amended from time to time.

Other Product Features       

Investor choice with regards to selecting and adjusting the investment portfolios you invest into.

Protection of your savings by limiting your investment’s exposure to risky assets, in accordance with Regulation 28 requirements.

The ability to make once-off contributions whenever you wish, and to start, stop or amend a monthly debit order contribution over the lifetime of the investment without incurring any penalties.

A maximum of a third of the value of your investment can be taken as a cash pay-out when you retire. The balance must be used to purchase a compulsory annuity which will pay you an income during retirement.

What will it cost?

Product Details Product Charges
Initial Administration Fee No initial administration fee is charged.
Initial Management Fee Certain Managers may charge an initial fee on your investment or switch into an Investment Portfolio. Click here to see Investment Portfolio List.
Financial Advisor Initial Fee A maximum fee of 3% excluding VAT.
Annual Administration Fee A weighted average fee is charged per policy/investment account according to the following fee scale:

Investment Value Annual Admin Fee (excl.VAT)
From R0.0 to R1 million 0.45%
Next R500 000 0.40%
Next R500 000 0.35%
Thereafter 0.25%

The fee is levied monthly in arrears by deducting units from your underlying Investment Portfolios to the value of the investment account.

Annual Management Fee Managers charge annual management fees, which are incorporated into the daily unit price of the Investment Portfolio. Click here to see Investment Portfolio List.
Financial Advisor Annual Fee A maximum fee of 1% excluding VAT.

 

SANLAM

Sanlam is the third most trusted company that offers annuity policy.Features of the policy follows below.

Sanlam Retirement Annuity

Start saving for your retirement from R300 per month and receive a bonus for every payment you make – with an additional 5% if you prefer to buy online.

The Sanlam Cumulus Echo Retirement Annuity is the only retirement savings annuity in South Africa that rewards you with an Echo Bonus for every payment you make. The longer you save, the more bonuses you get.

We believe financial advice from an accredited financial planner is a valuable investment in your financial future. However, if you prefer to do your own financial planning, we offer this product on-line.

How it Works

How does the Echo
Bonus work?

Calculator

How much do you
need to save?

View FAQ

View the Frequently
Asked Questions.

Buy Online

Buy online and get 5%
additional benefits.

How does the Sanlam Retirement Annuity Echo Bonus work?

The Sanlam Retirement Annuity makes it easy and attractive to start saving for retirement – even with a small amount. It’s the only retirement annuity in South Africa that rewards you with an Echo Bonus for every single payment you make. The more payments you make, the more bonuses you get.

But Echo Bonuses do not need to stop when you retire! You will have an option at retirement to continue your investment without further contributions. At the same time you will be able to draw a regular income. The benefit of this option will allow for a seamless transition from pre- to post-retirement within a product that you are familiar with. You will also continue to earn and grow the Echo Bonus uninterruptedly over the rest of your life.

Your money will be invested in the Satrix Life Time Investment Option. Initially, it invests in a passively managed fund, tracking a basket of indices at a very low investment fee. Six years before your retirement date, your investments are phased into a more conservative fund to protect your savings.

If you’re a parent or legal guardian, you can also apply to start saving in this retirement annuity on behalf of a child.

Example

The example is based on a monthly payment of R1000, taking into account an annual inflation increase of 6% over 25 years. It assumes an investment return of inflation plus 2% after fees.

 

Additional Echo Bonus: R54 160
This is the additional 5% Echo Bonus that Sanlam will add to your fund value if you buy online.

 

Echo Bonus: R429 170
This is the Echo Bonus that Sanlam will add to your fund value.

Investment Return: R517 970
This is the investment return on your plan. The fund value is equal to the payments plus the investment return.

Payments: R572 730
This is the total payments made on your Cumulus Echo Retirement Annuity

How Much do I Need to Save for My Retirement?

When you retire, you generally need less income than you had before retirement. This is because some of your expenses (e.g. travelling to work) will fall away. Also, you will pay less tax after 65 (and even less after 75). Depending on your retirement plans, you would need at least 60% of your final pre-tax salary after retirement.

 

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