What is a Retirement Annuity?
A Retirement Annuity is an investment platform aimed at retirement planning; call it a personal pension if you want to. The funds contributed to this platform is fixed up until the age of 55 should you wish to retire at this point in time.
Upon retirement you have the option of taking a third of the fund value of which the first R500 000 is non-taxable, the other two thirds then have to be reinvested into either a life annuity or a living annuity to provide you with a monthly/ annual income.
Why choose a Retirement Annuity?
On the retirement platform the funds are not taxed as you will be paying income tax at retirement stage on your monthly/ annual income. This provides an opportunity at investment stage.
The investor receives income tax relief from investing on this platform, a total of 27.5% of gross income can be written off against taxable income, and this is however based on your percentage of contributions towards the platform. Creditors can never make a claim on retirement funding and you can beneficiate the funds therefore bypassing the estate.