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Elderly woman in a virtual consultation with a retirement benefit counsellor on her laptop

Advantages of retirement benefit counselling

South African retirement funds must give their members access to retirement benefit counselling when they are close to retirement and at retirement. Retirement benefit counselling provides you with information about the options available. However, it is not a replacement for financial advice based on your personal circumstances.

We believe in the value of sound financial advice. At retirement, clients must make informed decisions about their options. Your financial adviser is best equipped to guide you through this process to achieve your goals, and we recommend that you get in touch with your adviser to plan for your retirement together.

What options do you have at retirement?

Woman researching her retirement options on a laptop.

The source of retirement savings and the rules that apply to that retirement fund determine your retirement options.

For non-vested benefits, you can:

  • Take at most one-third in cash at retirement.
  • Use the rest to purchase an annuity to pay you an income during retirement.

For vested benefits, you can:

  • Take up to the full amount in cash at retirement.
  • Use the amount you don't take in cash to purchase an annuity to pay you an income during retirement.

Your benefit statement will show your vested and non-vested benefits.

Any amount you take in cash at retirement will be taxed according to the retirement fund lump sum tax table, and your income from your chosen annuity will be taxed as ordinary income.

What to consider when choosing an annuity

You can select a combination of annuities or a combination of types of annuities as long as you use at least R165 000 for each one. There is no limit on the number of annuities that you can purchase. Therefore, you can choose a life and living annuity from different registered insurers.

When deciding on the type of annuity, you must consider how much flexibility and income certainty you need. Your risk appetite, health and other sources of income are also important factors.

Broadly speaking, there are two categories of annuities, each with its key features. A living annuity offers flexibility to decide how to invest your retirement savings and how much income you receive within certain limits.

A life annuity guarantees you an income for the rest of your life, and you don't make any investment decisions.

Compare annuity options for retirement

Is your income guaranteed for the rest of your life?

Living annuity

Life (guaranteed) annuity

Living annuity

No, you will get an income for as long as your money lasts.

Life (guaranteed) annuity

Yes.

Can you choose your monthly income amount?

Living annuity

Life (guaranteed) annuity

Living annuity

Yes, you can choose to receive an income of between 2.5% and 17.5% of your investment value every year.

Life (guaranteed) annuity

No, the insurance company will offer you a starting income amount based on various factors and your requirements.

Can you decide how you would like to invest your retirement savings?

Living annuity

Life (guaranteed) annuity

Living annuity

Yes.

Life (guaranteed) annuity

No, the life insurer will decide how to invest to provide you with your income.

Can you adjust your income every year?

Living annuity

Life (guaranteed) annuity

Living annuity

Yes, within the legislated limits, as mentioned above.

Life (guaranteed) annuity

No, the insurance company provides you with a range of income options, which may include a yearly increase option.

Can you change your annuity at a later stage?

Living annuity

Life (guaranteed) annuity

Living annuity

You can convert your living annuity to a life (guaranteed) annuity later.

Life (guaranteed) annuity

No.

Can your beneficiaries receive the rest of your money when you die?

Living annuity

Life (guaranteed) annuity

Living annuity

Yes, your nominated beneficiaries will receive the full balance of your living annuity.

Life (guaranteed) annuity

Yes, but your beneficiaries will only receive the remaining income payments if you die within the guarantee term you chose at the start of the annuity.

What is a 'guarantee term'?

Living annuity

Life (guaranteed) annuity

Living annuity

Not applicable to living annuities.

Life (guaranteed) annuity

A set term during which your income payments will still be paid to your beneficiaries.

Get financial advice

Take charge and ensure you receive a monthly income to maintain the life you've become accustomed to well into retirement.

We recommend that you get in touch with your financial adviser to plan for your retirement together. South African retirement funds must also give their members access to retirement benefit counselling when they are close to retirement and at retirement.

Select the “Find an adviser” button below if you don't have a financial adviser or speak to our retirement benefit counsellors on 0860 546 533.

Useful terms

Retirement glossary

Here are some retirement terms you need to know.

Insurance glossary

Here are some insurance terms you need to know.

In case you missed it

Find all our previous newsletters under one, easy-to-find space, for
your convenience.

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